Hello, first time poster here.
Some context, my grandfather passed away roughly two years ago. After a lengthy estate settlement, family drama and court procedures, last June I received a partial distribution of roughly $88,000. I used the majority of this money to wipe out my car loan ($6k, nothing huge), and as a 20% down payment on my first house. After all expenses I had roughly $11k left.
Tragedy happened literally the day of the move in, and our AC unit fried itself beyond repair. So $17k later I have a brand new AC unit, and a 10 year no worry warranty. I am generally a debt averse person, but my credit score let me finance it at 0% for 60 months, so that's cool.
Today I received my final distribution from the estate. $14k. This alone is almost enough to wipe out my AC unit loan. Financially I could just lump sum pay it off today, and save $250 a month. Or, I could throw this $14k in my brokerage account, and let the large lump sum grow.
My parents both believe that investing it is the smarter choice, taking advantage of the 0% interest. I personally am a debt averse person. I don't have a car payment, and I have no credit card debt. Just a mortgage, and an AC unit loan.
Looking for thoughts or opinions on this, thanks!
How to use remainder if my inheritance?
byu/Alarmed_Store7944 inpersonalfinance
Posted by Alarmed_Store7944
3 Comments
This loan is due in about 5 years, which is a fairly short-term time frame. I wouldn’t suggest putting it into equities where you have a significant risk of losing money. It’d be different if you were talking about a 20 year time frame.
On the other hand, at 0% interest, you can absolutely make free money by putting it into a HYSA (or a money market fund, or t-bills that mature in 5 years or less) at 4-5% and make guaranteed profit. If you want, put just the amount remaining on the A/C loan in the HYSA, and invest the rest.
There is no point in paying off a 0% loan early. If you don’t want to invest it (which is reasonable in these circumstances), put it in a HYSA and pay off the loan out of that money every month. That way you pocket the interest rather than the bank.
Before all that, though, do you have an adequate emergency fund? If you don’t, that should be your first priority. See [https://www.reddit.com/r/personalfinance/wiki/commontopics](https://www.reddit.com/r/personalfinance/wiki/commontopics)
0% loan – no reason to pay off early.
Put it in HYSA, draw your interest and pay your monthly payments until it is paid off.