Now To the Matter of Investment
It may not be a bad idea to create an emergency fund which can meet your regular expenses for about six months from this inheritance. Put this in a separate account or in a short term deposit account.
Do some research on the various method of investment. This must include savings accounts, certificates of deposit and money market funds. Now make out a strategy for a long term investment based on your age, projected expenses and current income.
Buying property with the sole intention of renting it out is another one of the investment opportunities that you can look at. Property has also the added advantage of appreciation that can increase the value of your inheritance substantially.
If you are looking at safer methods of investing consider annuities or life insurance cover. Annuities are pension plans that can take care of old age worries.
Ideally you should consider all these alternatives for your investment, and if the sum inherited is substantial, it would even be a good idea to apportion it to all these various forms of investment. Go for the less risky investments like certificates of deposit, life insurance and annuities if you are nearing retirement or not very far from it. Invest in the stock market if you fancy higher returns but limit this to only a part of your inheritance. Taking the advice of financial consultants is a must before venturing into the stock market, especially if you have never made this sort of investment before. Buy property that is located in areas that have potential for development as this will help appreciation.
While making these investments and ensuring income for you, it would be advisable to keep the personal tax angle in mind at all times. The inheritance may change your tax bracket and have you paying a much higher tax than you are mentally attuned to.