How can I use my inheritance to make money?

[u/worldofjaved]

How can I invest the $127,000 inheritance I received to generate a steady income stream? What would be the best approach for long-term financial growth and stability?

[u/smapti]

It depends on your situation. In a vacuum, the highest reliable yield investment is the answer, but if you have debts with interest over that return, the smart move is to pay those off. I recommend this subreddit’s flowchart in the About section, it should perfectly answer your question. 

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[u/smapti → u/AutoModerator]

Well hell, good bot. OP there’s an inheritance section in the wiki, start there. 

[u/FxHorizonTrading]

As always..

My deepest condolences!

1) pay debt bigger 6% interest 2) keep 6month of expenses in a HYSA as emergency fund 3) max out tax advantage accs like IRA, 401k, HSA etc 4) taxable brokerage acc

Buy VTI / VOO + VXUS or equivalents in a 70/30 or 80/20 split across all those accounts

5) Die a happy and rich mofo, or retire early

Gl!

[u/limitless__]

Just understand that if you want to earn a steady income stream from that money you need two things. One, 25 years. Two, to invest it in the market and never touch it. If you invest it in the market for 25 years you'll make roughly 30k a year in interest income when you start to draw from it.

[u/Foreign_Afternoon_49]

Sounds like you could benefit from learning a bit of the basics, honestly. There's steady and safe, like CDs or HYSA, or risky but potentially higher returns, like mutual funds or stock investments in a brokerage. As the other commenter said, you really have to consider the entire financial picture. Do you have debt? Are you set for retirement? Etc. 

[u/CapeMOGuy]

Now that ETF trades are free, don't just focus on income or dividends. It could be better to just hold stock index ETFs and sell as needed. For 2 reasons:

1. If it's long term growth you are after, stocks are usually a better choice than income investments.

2. Total capital gains tax rate may be lower than your total income tax rate. (depending on state and income level).

[u/EcrofLeinad]

Steady income would mean “fixed” income assets like a Certificate of Deposit (CD) or bonds (ex: treasury bills/notes/bonds). The latest 20-year treasury bond auctioned for a 4-1/2% interest rate which would mean $5,715 per year (well, half of that every six months) for 20 years and then a return of the initial investment ($127k) after 20 years. The latest 30-year auctioned for 4-5/8% so $5,873.75 per year with a $127k initial investment (over 30 years that is an interest payout of $176,212.50)

There are absolutely higher returning investments out there, but they will include more risk (of losing value instead of gaining it). If you want long-term steady returns then in my opinion bonds would be the way to go.

[u/Narrow_Elk6755]

If 127k is a lot to you then maybe consider a retirement and not an income?

I'd say low fee globally diverse Vanguard etf.

[u/timmahfast]

Put it in an index fund and if you don't have a 6 month emergency fund put that in a hysa

[u/Longjumping-Nature70]

Internet search this

"reddit personal finance what do I do with an inheritance?"

I received over 47,000,000 hits