Investing Inheritance Money

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Q: My aunt passed away and she left me with an inheritance. I now have $55k in the bank and don’t know what to do with it. I am a single woman in my early thirties with a great credit score and think that the wisest option is to make this part of my retirement fund. Do you agree and what would the next best steps be for me?

I'm sorry to hear about your recent loss. Inheriting money is a mixed blessing as you now have a sudden windfall but it comes with lots of emotion. Before you decide to put this money into a retirement account, I have a few questions to ask you. Do you have an emergency savings account? This would be at least 3-6 months worth of expenses saved in a money market account (preferably indirect.com that is earning more than your local bank). If not, this should be the first place to put your money. Second, if you have any credit card debt, I would pay it off now as well. Then, are you already saving for retirement through a 401k at work? If so, are you maximizing your contributions? If so, perhaps you can use some of this inherited money to help you out. You can also setup a ROTH IRA (if your income is less than $120,000) and contribute the maximum for the year, $5,000. I like Vanguard as they are the cheapest mutual fund company around! I also want you to consider using some of this new found money for a down payment for a new home. There has never been a better time to be a home owner with interest rates their lowest in 50 years and home values at a low as well.

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