I was asked the question, what would you do if you inherited some money? Well it would depend. If it were $1000 or less I think I would take 10% and spend it on a nice dinner out and save the rest. Honestly it’s not really enough to make a difference in my lifestyle.
If it were $10k? I think I still might spend 10% on fun stuff, but the $9k would likely go into a retirement savings account. I’d probably consider myself very fortunate and happy. It would make my life a little brighter but it certainly wouldn’t change my life.
If I were to come into $100k? Well now we’re talking of a bit more of an impact on my life. I don’t think I would necessarily spend $10k on fun. Instead I would probably take that 10% and determine if my house needed any necessary repairs or if my car might need replacing in the next couple of years. I would take that $10k and earmark it for either home repair or car replacement. The other $90k? I would invest it 90% stocks/10% bonds with the intention of using it for retirement. This amount of money would definitely change my retirement planning and investment strategy. I would know that I can be more aggressive investing for a chance at earlier retirement.
If I came into $1 million or more? Well I’d probably do nothing for 6 months. I would just park it into a few different saving accounts so it’s FDIC insured and start looking for professional help. If it were $1 million I probably couldn’t quit my job and retire but if it were $10 million? I probably could and consider starting my own business. I would probably conservatively invest it 70% stocks and 30% bonds. I might also consider paying off my mortgage and debts, again depending on the amount I inherited. I might also consider setting up college funds for my kids.
The main thing I wouldn’t do is immediately invest or spend the money. I would definitely take at least 3-6 months to think about my life and the money.
What would you do if you accidentally came into $1k, $10k, $100k, and $1 million?
8 responses so far ↓
1 Meg from FruWiki // Jul 4, 2009 at 2:13 pm
I’m afraid I’d be really boring and apply it to debt. Even $100k (would be paying off part of the house at that point).
Of course, I might have a couple nice dinners if I hit it that big, but I’d try not to make it a habit.
At a million I’d be easily debt free, but I’d want to set aside plenty of that for retirement. I wouldn’t want to change my lifestyle drastically. It is really easy to go through big money if you’re not careful. However, in this case, I think I would take a few grand and travel for a bit — a few weeks here and there. As it stands, that’s one of the things I already really want to do when I get out of debt. So, that’d be pretty much as planned.
2 LAL // Jul 5, 2009 at 10:53 pm
I’d invest the $100k probably because I would want to pretend I don’t have it and just save it for retirement.
Although $10k for a purchase or home stuff would be nice.
3 Kristen Sullivan // Jul 5, 2009 at 11:25 pm
FiLife has a calculator that helps you figure out whether you’re better off paying down your debt or investing a windfall. It’s worth a look:
http://www.filife.com/calculator/should-i-pay-down-debt-or-invest-my-monthly-surplus
4 LAL // Jul 6, 2009 at 8:09 pm
It’s likely around the same. The difference is the emotional aspect of paying off debt or pretending it never happened OR spending it.
5 sarah // Jul 8, 2009 at 10:18 am
Interesting question. DH and I are lucky enough to receive 10k every 6 months as part of inheritance. 100% of the money goes into our taxable investments (when we qualify for Roth IRA it goes there first). It doesn’t change our current lifestyle at all. In the future we will (hopefully) have a larger retirement cushion than we would have otherwise and that could lead to a nicer home or more vacations (whatever is needed/wanted at the time).
If I received 100k? I still think it would go straight into investments, although I would take a portion for charity and helping out family with some projects I know they want.
If it were 1 mill, I would do nothing until we have our first child, then quit working (as currently planned) and pursuit other interests. With an added mill DH and I would both probably take a year off and live at our farm and enjoy life/family/finish projects at the farm as well as help family and make larger charitable donations each year that follows.
If it were 10 mill, we would quit work immediately and do the same things mentioned above (plus build a small but well-designed winter home at the farm and a summer home on the west coast).
6 LAL // Jul 8, 2009 at 5:17 pm
Sarah, sounds great to get a small $10k windfall every six months. That would be awesome. I agree it would be nice to get $1m or more.
Although if you get $10k every 6 months, then how long until you hit $500k or $1 m? Is that a possibility?
7 Meg // Jul 8, 2009 at 6:26 pm
My answer is the same for $1k, $10K, and $100K – I’d just stick it in my “emergency fund” and increase my sense of security.
If I got $1MM I would stick it in savings (as high yielding as possible) and sit on it for awhile as well. I’d use the income from it to max out my retirement accounts (which I can’t afford to do yet) and put 3 years of savings in my EF. I’d also give away 10%.
But after that I think I’d have to think about it. I’d probably just consider it “retirement” or long term savings. Maybe to use before “retirement” if I want to start a business or send my kids to private school or something. But I wouldn’t quit my job or anything. Right now $1MM in the bank will only generate around $15,000 a year in income.
8 LAL // Jul 9, 2009 at 10:40 am
Yeah $1M doesn’t go very far.
Leave a Comment