[USER]

Need some advice for friend who is 25 and about to inherit over $200k. Completed college, No student loans, single but rents an apartment w parter, no debt and very new the FI mindset.

Ideas on where to park the money as they have a decent job making good money and don’t need the extra money right now, but they would like to still have access to some if the right opportunities came up.

Thanks in advance

[Jule]

1. There’s no “they.” The money is your friend’s solely.
2. If your friend decides to buy a home later, then he/she can use the money for it while keeping the home in his/her name only.

Unless the partner matches her/his down payment.

For now your friend can open a high yield savings account to keep it safe and liquid until he/she decides what to do with it.

Just keep it separate.

[Mia]

“Opportunities coming up” is scary since it usually means big impulse spending or speculation. Id strongly encourage getting a plan and giving all of that money a job.

Up to $7,000 to max out this year’s Roth IRA limit
~$30k 6 month emergency fund

Set aside money in a sinking fund for any large foreseen upcoming expenses like car repair or replacement, call it $13k for even numbers.

Now down to $150k. Id say take a reasonable portion like 10% of the money as a fun budget, so $20k.

Then of the remaining $130k, figure out what is needed to put a large enough down payment to get a townhouse or small single family home mortgage down to 25% of her after tax income or less — that’s the definition of”affordable.”

Her income alone!!! Boyfriend has no part in this if they are not married. House is under her name only.

Let’s say that’s $100k.

Then the remaining $30k into a brokerage account in boring index funds that will earn an average of 10% / year long term.

That’ll be an extra $500k or so near retirement age that will be separate from retirement accounts and their specific tax rules.

[Damon]

With no timeline I’d just park in an S&P index and keep it moving. That’s with the limited context.

[Jeremy]

Park it in a HYSA until they have more clarity on their future goals for this morning.

[Sharon]

Please don’t allow your friend to co mingle the inheritance with a partner at this time.

I think an index fund may be great.

I feel a ROTH could also be a great avenue.

[Mark]

“right opportunities come up”. no idea what that means or the timeline. general rule of thumb with a windfall. do nothing for 6months to a year. put the money in a HYSA or CD.

get a gameplan together on the best use of the money.

give the money a “job” spend, save, give. a combo of all 3 is most rewarding.

[Jake]

Brokerage into a good growth fund and left alone. Account in only their name. That’s retirement. Still take 401k match and also Roth IRA if income bracket is low.

I wouldn’t use this to buy a home.

Save up together for a down payment. This could be used to help get good loan approval though, I’ve used proof of cash reserves and it makes lenders jump over each other to get you a good loan.

[Dave]

High-yield savings account or short-term CDs in the immediate term.

Would probably make sense to start dollar cost averaging it into the market through VTI or similar.

[Zane]

7k in roth now and then 7k more on 1/1/26.
By right opportunities, man thats a scary statement. But anyways, I would buy a duplex and live in one half and rent other.

Then 1-2 years later do it again based on his/her state.

Nothing wrong with keeping an emergency/FU fund in a CD or money market.

They weren’t given 200k, they were given millions if they manage it correctly. PLAY THE SLOW GAME.

[Lisa]

Brokerage account. Keep it growing. They should already be putting money into their Roth and 401k.

If not, start that too, start growing the investment tax free in the Roth.

[Jackie]

If he’s got a ROTH he could max out his 2025 of 7K. If he does not have a ROTH I would have him get one and max it out for 2025 and then again for 2026 when the time comes around again.

If he can do that every year he will be in good shape later on.

Then put in a HYSA.

[Jenny]

I would put the money in HYSA for a year before making any major decisions.

If your friend is handy and likes real estate, and lives in an affordable area, buy 2 to 4 units residential properties, live in one unit, rent out the rest.

Make sure is money is not commingled with the partner’s money.

If your friend is not interested in real estate, invested in an index fund and let it ride.

[Ron]

I personally don’t like the binary invest for 30 years or HYSA choice. I think it’s pretty normal to not know when you’ll need a chunk of money and exactly how much.

What I prefer to do, and am doing, is to use a balanced portfolio like the Golden Butterfly to pump money into for these uncertain amount and timeframe needs.

Golden Butterfly is 20% each US total market, US small cap value, US ST Treasuries, US LT Treasuries and Gold.

If you look historically, because it has balanced elements it has significantly lower drawdowns when stocks are plunging, quicker recovery time, but has a reasonable long term average CAGR.
Good luck.

[Dawn]

Stick in high interest saving account for year or 2 before making any decisions

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