New Visitors Privacy Policy Sponsorship Contact Us Media
Baby Boomers Family Green Home and Auto In Critical Condition Just Starting Out Lifestyle Money
- advertisement -
Bankrate.com
News & Advice Compare Rates Calculators
Rate Alerts  |  Glossary  |  Help
Mortgage Home
Equity
Auto CDs &
Investments
Retirement Checking &
Savings
Credit
Cards
Debt
Management
College
Finance
Taxes Personal
Finance

Investing an inheritance

Dr. Don TaylorDear Dr. Don,
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 Deposit

- advertisement -

Dear 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.

Keep an 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.

Combine this 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 by Congress.

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?

I 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.

 
-- Posted: March 17, 2003
   

 

 
 

 

Looking for more stories like this? We'll send them directly to you!
Bankrate.com's corrections policy
Print   E-mail

30 yr fixed mtg 4.08%
48 month new car loan 3.21%
1 yr CD 0.66%
Alerts


Mortgage calculator
See your FICO Score Range -- Free
How much money can you save in your 401(k) plan?
Which is better -- a rebate or special dealer financing?
VIEW MORE CALCULATORS

BASICS SERIES
Begin with personal finance fundamentals:
Auto Loans
Checking
Credit Cards
Debt Consolidation
Insurance
Investing
Home Equity
Mortgages
Student Loans
Taxes
Retirement

MORE ON BANKRATE
Ask the experts  
Frugal $ense contest  
Quizzes  
Form Letters


- advertisement -
 
- advertisement -

About Bankrate | Privacy Policy/Your California Privacy Rights | Online Media Kit | Partnerships | Investor Relations | Press Room | Contact Us | Sitemap
NYSE: RATE | RSS Feeds |

* Mortgage rate may include points. See rate tables for details. Click here.
* To see the definition of overnight averages click here.

Bankrate.com ®, Copyright © 2014 Bankrate, Inc., All Rights Reserved, Terms of Use.