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We all need money management advice, whether you’re an experienced investor or a young adult trying to purchase a first home. MassMutual’s team is here to help.
Today’s insights on how to manage an inheritance come from John Kashmanian, a financial professional with Oceanstate Financial Services in Warwick, Rhode Island.
Q: I’m expecting an inheritance in the next few years. How should I put it to work? Invest it for growth? Pay off debt? Buy a house?
A: When clients tell me they’re expecting an inheritance, the first thing I emphasize is that there’s no “right” answer for how to use it. The best strategy depends on your broader financial picture, your goals, and the role this inheritance will play in your life over the long term.
Before deciding where the money should go, it’s important to pause and plan. Inheritances can be emotionally charged, and rushing into major decisions can lead to outcomes you later regret. In many cases, holding the funds temporarily in a conservative, liquid account while you build a thoughtful plan is a smart first step.
From there, we want to evaluate priorities. High-interest debt from things like credit cards and personal loans is often at the top of the list. Paying down these types of debt can provide a guaranteed return in the form of avoided interest costs and free up monthly cash flow, which can strengthen your overall financial foundation.
For some individuals, using a portion of the inheritance toward a home purchase or other major life goal can also be appropriate. The decision often comes down to balancing lifestyle goals with long-term financial security.
For example, a larger down payment on a home purchase may reduce future housing costs and provide peace of mind.
Investing in hopes of long-term growth may also make sense, especially if you’re already on track with emergency savings, debt management, and other major purchases.
An inheritance can be a powerful tool to help fund retirement, pay education costs for children, or provide future financial flexibility. The key is ensuring the investment strategy aligns with your time horizon, risk tolerance, and existing portfolio.
Finally, tax considerations, estate implications, and how the inheritance fits into your overall plan should not be overlooked.
Working with a financial professional can help you evaluate trade-offs, prioritize decisions, and put the inheritance to work in a way that reflects both your goals and your long-term financial well-being.
Discover more from MassMutual…
Why having an emergency fund is a top priority
Expecting an inheritance? Don’t count on it
Estate vs. inheritance taxes: What you should know
