‘I feel lucky’: I’m 71 and inherited $20,000. What should I do with this money?

The inheritance of $20,000 by a 71-year-old individual presents an opportunity to reassess their financial portfolio and make strategic decisions. Given their existing financial setup, which includes an IRA, a high-yield savings account, four CDs, and checking and savings accounts, it's clear they have a diversified range of savings and investment vehicles. The key consideration now is how to allocate the inherited funds to maximize returns while ensuring alignment with their current financial goals and risk tolerance.

The decision on what to do with the $20,000 will depend on several factors, including the individual's income needs, tax situation, and investment horizon. Since they already have a spread of savings options, they may consider adding to their IRA to boost their retirement savings, or perhaps diversifying their investments further by exploring other asset classes. The CDs indicate a preference for low-risk investments, but they might also think about allocating a portion to higher-yield investments to counterbalance the generally low interest rates offered by CDs and savings accounts.

As the individual weighs their options, it will be important to watch how they balance the need for liquidity with the desire for growth. They should also consider consulting with a financial advisor to get personalized advice tailored to their specific circumstances. Additionally, they might want to explore tax implications of their decisions, especially regarding their IRA contributions and potential withdrawals. The next steps will likely involve a careful review of their overall financial plan, ensuring that the inherited funds are integrated in a way that supports their long-term financial security and goals.

Originally reported by marketwatch.com. FundNews adds analysis for finance & markets readers.