Investing an inheritance
I will be receiving a $30,000 inheritance in about six weeks.
I have about $12,000 in savings and about $25,000 in my 403(b) plan. I'd like
to put this inheritance away in an interest-bearing account such as a certificate
of deposit but earn the best interest possible. Any suggestions? -- Devonne
I always have mixed emotions when I hear someone has received
an inheritance because I realize that the windfall generally comes about because
the inheritor has lost a family member or friend.
eye on the status of the Bush tax plan. The proposed Lifetime Savings Accounts
would allow you to invest up to $7,500 a year, and the contribution limit will
be adjusted for inflation each year. You'll be able to withdraw money from the
account at any time for any purpose. While contributions aren't tax deductible,
the money grows tax-free, and distributions will also be tax free. This
Bankrate feature has more on the proposal.
with the proposed Retirement Savings Account that will allow you to contribute
up to $7,500 a year toward retirement with future contribution limits being adjusted
for inflation. Contributions aren't tax-deductible, but earnings will accumulate
tax-free, and qualified distributions after age 58 (or upon disability or death)
will be tax-free.
You can always shop for the best CD rates
in the nation using Bankrate's
Best Rates page. I'll advocate keeping half the money in CDs maturing in 2003
and half maturing in 2004 until the fate of the president's savings plan is decided
Don't look at this investment decision in isolation.
Take a holistic approach to your investments. After all, it's all your money.
How is your 403(b) plan invested? How are your current savings invested? What
are your financial goals beside retirement? When do you plan to retire?
think it's worth the time and expense to have a fee-only financial planner review
your holdings and suggest some investments, especially when it comes time to fund
these tax-free savings plans. The
National Association of Personal Financial Advisors can help you find a fee-based
planner in your area.