I (32m) just found out that I will be inheriting a very large sum of money and am completely unprepared on what to do with it, if I should do anything at all with it.
Over the holidays a close family member passed away and just this week, I found out they left me a huge surprise…
$500,000 in a Schwab account and $50k cash. I have no idea what stocks/bonds/etfs/etc. it is invested in yet, nor any idea on how to handle this life changing windfall. My wife and I have a few ideas for the cash , but this is an amount I only ever dreamed of having and certainly dont want to squander it or make a mistake that I will regret decades down the road.
Some information on our current financial situation:
We own our home valued at $360k still owing $278k with a 2.75% interest rate. I have $26k in a personal brokerage account. $3k in a Roth IRA, $25k in my company 401k and make an annual pre-tax wage of about $90k – $100k with salary and overtime. The Wife makes around $90k annually as well, with only $3k in a Roth IRA. No other investments. We've only had these well paying jobs for about 2yrs. We have a vehicle loan with $9k left on it, and a solar loan with about $10k left on it. No other debt (besides the previously mentioned mortgage).
As I stated, I am completely over my head with this amount of money and am looking for guidance on how to navigate this situation.
Any insight is welcome.
Surprise Inheritance, I was totally not prepared for.
byu/Tonyb97 ininvesting
Posted by Tonyb97
7 Comments
[https://www.reddit.com/r/personalfinance/wiki/windfall/](https://www.reddit.com/r/personalfinance/wiki/windfall/)
Me personally, I’d clear any outstanding debts/loans and invest a big portion say 75-80% into vanguard all world FTSE (dist) inside of a Stocks and shares ISA account so any dividends you receive are tax free “certain amount depending on where you reside” continue working your jobs and take an early retirement and enjoy the money.
Consider speaking with a financial adviser regarding your situation and taxes ect.
Sorry for your loss but congratulations on the capital gains
It may be fine as is currently invested at least for the time being. I’m sure that the Schwab rep will be more than happy to talk you through the basics especially if you plan to just keep it with them. They’ll probably be your best source of info. Then once the dust has settled and you figure out where you’re going to keep it (with them or another brokerage), you can research the positions and decide what you want to do or seek the help of a manager if you really want. Though they usually just throw money in a few low cost funds and call it a day so it’s not really worth the money it costs you unless you just absolutely don’t want to learn basic investing yourself. Congrats and enjoy!
Pay off the car loan, what rate is the solar loan at? Probably pay that off. Put the rest in a money market account at your brokerage (emergency account) and keep the stocks invested as is.
Then, leave it all alone and do as you were doing. Don’t get a new car, or “splurge”. Whatever you do, do it with the income you had before and just have a stress free retirement one day. You can retire a little early if you want to (or not). Retire at 55?
–First, don’t tell anyone about it. Your friends, family, co-workers will be coming out of the woodwork with requests for money and idiotic investment ideas. At the very least, they can grow resentful and it can interfere with your relationships.
–Get the money into a brokerage: Schwab, Fidelity, or Vanguard. Open an account with only your name on it.
–Make sure the cash is invested in safe funds that pay a decent return — a money market fund, or a treasury bill fund such as SGOV or VBIL
–Do not commingle this money by putting it into an account with anyone else on it.
–Pay off any high interest debt (probably your solar loan and car loan)
–If you haven’t maxed out your Roth IRA for 2025 and 2026 for you and your wife, go ahead and do that
–For the rest, wait a year before changing or spending. Take some time to plan and learn. Don’t YOLO into expensive new cars, home remodels, round the world trips, etc. I think you should seriously consider just investing most of it in passively managed, low cost ETFs and considering it part of your retirement savings. Looking at the financials you posted, you are a bit behind on retirement. Once you get any high interest debt paid down, you might find a way to increase 401k contributions. And make sure that whatever else you do with this money, you keep 6 months of expenses in an emergency fund.
OP, I’m sorry for the loss of your family member.
Wow not sure whether to express condolences for your loss or congratulations on the windfall. Feels like paying off the car and solar loans makes sense unless you have ridiculously low rate. Mortgage sounds manageable and a great rate so I’d leave that alone. Probably you can now beef up those Roth accounts for tax free growth.
Kill all your debt, 100% of it. You have a great mortgage rate so if you’re not in a hurry to close that out I don’t blame you. You could pay half of it down instead to get the monthly payment to a minimum as another option. It rest sounds like most of it is already currently invested so have a look at how it’s positioned and assess where you want it to go from there. Bottom line is what do you want this blessing to mean for your family? What do you want it to produce for your children or the next generation in your family? It’s a large enough sum to start the path of generational wealth accumulation.