'Just inherited approx $500k from bro, but don't need more$ right now.': I have a windfall, what should I do with it?

Hey Money Minder,

So, I’m trying to figure out how to pay less taxes – any tips? And once that’s sorted, what do I do with the funds (besides throwing some cash to charity)?

Here’s the lowdown on me:

I’ve had my home since 2013 and still have a mortgage.
No other debt – I’m clean in that department.
I bring in around $90k a year with my blue-collar job.
I’m not a big risk-taker when it comes to investments.
Real estate isn’t really on my radar.
No kids, just a niece and nephew from my sibling.

I’m open to any smart advice you’ve got for me. Thanks a bunch!

Cheers,

Money-Savvy Joe

Response from THE MONEY MINDER:

Hello There,

Congratulations on being proactive about reducing your tax bill and planning for your financial future! Given your current financial situation and goals, there are several practical steps you can take to optimize your tax situation and make the most of your distributions.

Firstly, consider maximizing contributions to tax-advantaged retirement accounts like a 401(k) or IRA. By contributing pre-tax dollars to these accounts, you can lower your taxable income and potentially reduce your overall tax bill. Additionally, look into any available tax credits or deductions that you may qualify for based on your circumstances.

Since you have no other debts and a low risk tolerance, focus on building a diversified investment portfolio that aligns with your risk profile and long-term financial goals. This can help grow your wealth over time and provide you with additional income streams in retirement. Consider consulting with a financial advisor to help you develop an investment strategy that suits your needs.

When it comes to distributions, aside from making charitable donations, you may also want to consider reinvesting the funds back into your investment portfolio to continue growing your wealth. Alternatively, you could use the distributions to fund other financial goals such as saving for a rainy day fund or your niece and nephew’s education expenses.

Remember to regularly review your financial plan and make adjustments as needed to ensure you are on track to meet your goals. By taking a practical and realistic approach to managing your finances, you can set yourself up for financial success. All the best from THE MONEY MINDER!