I'm inheriting $300,000. How do I not screw this up? Brian, I am so excited to talk about this because sometimes life throws us these curveballs that we're not expecting. And sometimes the curveballs are pretty good. And we want to figure out, okay, I've got this once in a lifetime opportunity. What do I do and how do I navigate it? I love that we can answer those kinds of questions. As a matter of fact,
I love that we can answer all of the questions that you guys send. It's one of our favorite things to do every Tuesday morning at 10 a.m. Central. So we want to answer the questions that you care about. So with that, Megan, I'm going to throw it over to you.
Great. We're going to start off with a question from Peter M. He says, I'm 28, and on step six of the food, I will inherit $300,000 soon, and I'm unsure where to put the money. I would like to retire early, so should it be an taxable account, index funds, or a target retirement account. What do you guys think?
This is exciting. So it's one, Peter. This is a unique opportunity. A lot of folks don't have a situation where they get to inherit some level of wealth. And so it sounds like you're in a position where you are. It's really interesting and your question doesn't state this because, hey, I'm going to inherit $300,000. My immediate
first question is, okay, how is that money currently structured? Because most often, when there's an inheritance, you might inherit some checking accounts and savings accounts or maybe there's a piece of property that got sold. But oftentimes, there are things like IRAs or Roth IRAs that you inherit as a beneficiary.
that what you're supposed to do is you're then supposed to open and inherited IRA or an inherited Roth IRA and you roll the assets into that and then there are certain required distribution requirements on those assets. I'm going to guess by the question that he's talking about inheriting $300,000 after tasks because obviously if you're inheriting anything inside of a tax structure like a 401K IRA or Roth IRA,
It likely makes the most sense to open up an inherited account to put that money in. So you can continue either with the tax deferred growth or the tax free growth from now for the next 10 years. So I would not think about using any of that money immediately to go cash it out, pay taxes and do something on. I'll let that money keep rolling. But he poses an interesting question. What does he do with the money that comes to him after tax? That's 300,000.
The first Peter, you know, typically inheriting money is after the loss of somebody. So first we're sorry for the loved one that you've lost, but it is, it's one of those things we're always thinking about with inheritance is there's a legacy component of this too, is what a cool thing
for somebody's discipline or hard work to pay it forward and give you an additional opportunity for the future. This one even has an extra special sweetness in the fact that you're already at step six of the financial order of operations, which everybody knows by the time you get to or
If you have it, I would invite you to go to money.com slash resources, or if you even want to go a deep dive. And when I'm about to talk about a step seven hyper accumulation, I really think that this book puts an exclamation point on what that step is and how to leverage that to the most. But it is one of those things where
you're going to be able to hit the 25% savings rate just off of not only your good discipline, but also the little bump that this this inheritance is going to give you. But then beyond that, you're going to move into step seven. And that's why I think that, like I said, it's it's this is a blessing with a legacy component that you get to move into step seven. And the key thing about hyper accumulation is is that you say,
All the other steps were how do I maximize, keep my life out of the financial ditch and avoid the traps like high interest debt. Step seven is the first one that says how are you actually going to in the long term?
use these assets. So this is going to be a great time to pause. You don't have to get in a hurry on this because that's the other thing I tell people when you inherit money is take, you know, be very, measure twice, cut once. You can be very mindful of making good decisions with this is.
Are you said you're retiring early? For me, that does mean like maybe an after-tax account might really be a good thing. But then as you go through your checklist mentally of what the long-term goals you said early retirement or opportunity to early retire, that is an after-tax. But then you think about are there other lifestyle things that you and your family have talked about to pay it forward with this legacy is that
Are you going to be moving to a different house? Or are you going to change careers? Because this allows you to have more flexibility and resources. Make sure you're just looking at all of those intermediate goals, meaning in the next six to 10 years, 10 years and beyond as long term goals. And you balance that out and then you structure your accounts in step seven to go ahead and start taking action to reflect those goals. Now, there was one little extra piece at the end of the question. He said, Hey, should I consider
index funds or target retirement funds. And for those of you that don't know, we love target retirement index funds because all you have to do is decide two things. How much can I save and when do I think I want to retire? And if I think I'm going to retire in the year 2050, I'll select the target retirement index 2050 fund. And right now, it'll be pretty aggressive, heavy on the equities. And then as I move through time, it'll get nationally more conservative. And we say,
For most people, starting out the beginning of your financial journey, target retirement funds are a fantastic solution. But once your portfolio hits the asset size to where you are at critical mass, you might be able to benefit not just from a generalized portfolio solution, but it might make sense to move to a more specialized portfolio solution. So when I hear that you have $300,000 coming your way and you're already
In step six, there's a really good chance that you may be graduating beyond just the target retirement index fund. You might want to think about how do I design and build a custom allocation specific to my needs, my risk tolerance, my risk timeline, my risk capacity.
And what does that look like, especially given there's going to be this large inflow? And then how do I think about allocating into that portfolio to do it all at once or do I potentially dollar cost average into that allocation over time? These are the kind of things you want to think through as you figure out how to utilize these dollars. Yeah. I mean, you're spot on. I think index target retirement funds are great in the fact that it helps you with
what you know how much can I save and then the asset allocation and how it changes what I love about what you said when you get into larger sums of assets that tax location is just as valuable as the asset allocation if you don't know what tax location means that is just that it's kind of you asked it in your question what's the difference between after tax or taxable brokerage accounts
Tax deferred accounts, and then of course those Roth tax-free accounts, they all do things differently and well, and you want to put different investment types to maximize the benefits that each one of those can provide, as well as the liquidity and access. So those why, this is probably a great point. When you come into this type of money, you've only had one chance at having these type of assets, six figures, multiple six figures, on top of your already good discipline and behavior.
If your life gets complicated, go find somebody who's done this hundreds of times to help you navigate it and avoid the blind spots and all the traps. And taking the relationship to the next level is probably warranted at that point. It's great. Great advice. All right. Thank you, Peter, for your question. Hopefully that gives you a lot to think about. Next up, we've got Tori T.
They say, do you have any general advice for adults going back to school later in life? I just turned 30 and in my senior year as an accounting student. Balancing school with adult life and entering the messy middle is rough. What advice do you guys have for Dory?
as if the messy middle weren't messy enough, right? Uh, first of all, I commend you because it's hard going back to school later in life as a difficult thing because most folks enter into the thirties, enter into the messy middle. They have a thousand different things, pulling them in a thousand different directions or short on time, short on money. And there's not a whole lot of room for excess. And yet Tori here you are. And I've got all that stuff likely going on.
And I'm going to go back to school. I'm going to go finish out because I want to perhaps pursue a different vocation. I want to go into accounting. I love that. So the question is, what's the general advice? This is the way that I would pose a general advice I would give you is do the best that you can as often as you can. Because what's going to happen is if you're back in school, you're likely not working full time or you're likely not making the same income you were.
And so the messy middle gets even messier. While it would be very easy just to shut everything and say, you know what, I'm going back to school, I'm going to get my education, I'll put everything on pause until I get to the other side of that. While that is a strategy, I don't know that it's the absolute best strategy because the money that you're able to accumulate in this early thirties at this stage of life can be incredibly valuable for you. So as you look at the front, Brian, can you have the thing up?
Oh, yeah. As you look at your financial order of operations, you think about where you are. Maybe before I went to school, I was at step six and I was moving towards maxing out that employer plan. Maybe you do have to take a few steps back, but.
I would encourage you, if you can, you are still working. Let's still get the employer matched. Let's make sure we have a fully funded emergency fund. And can we be doing things like maxing out the Roth or maxing out the HSA? Because even little small marginal decisions that allow you to stay the course at this stage, when you get to the other side, when you get into your new career, when you get to age 40, 45, 50, you'll look back and think, man, I'm so glad that I didn't shut everything down. I'm so glad I kept
I kept the ball moving forward. I agree but slightly disagree too. And I'm going to just go ahead and say it. I think you're giving setting up a good cop bad cop and I appreciate you taking the role of the bad cop there by basically saying, hey, even though you're doing this incredible thing to better yourself, make sure you keep doing everything else too. And I just worry from the behavior.
I worry from a behavioral standpoint, because you already heard when Tony was asking the question that it feels like there's just a lot going on right now. And what I worry about is that whenever I'm dealing with
hard life things. I have an internal question. I always ask myself, is this a season or is this just the way things are? And I want to commend you is that obviously at some point you asked yourself that question and you said, you know, I feel like I'm in a bad place or I need a better opportunity. See, like I'm going to turn this
trajectory I'm on, and I'm going to go take a season for myself where I'm going to invest, go get an accounting degree, and better my life. That's an incredible choice first of all. So then you ask yourself once you're in this decision of your back in school,
season or just how things are. Well, now you're in a season where you've got to do good in school, you've got the family, but you've also got this pressure of your financial life going on as well. And I think Bo is spot on. It is, I want you to be scared, but purposeful that every, when you're 30 years of age,
Every dollar has potential become twenty three dollars. You know, when you were twenty, back when most people were in college, every dollar had a potential to be eighty eight dollars. But I know in your future self, your forty year old self, every dollar only has a chance to become seven. So Bo is exactly right that it is important.
But think about the fact if your income is going to have the potential to double, triple, maybe even quadruple over your lifetime, the season you're in where you're investing in education is going to be so much more valuable even within some of that compounding growth because the savings rate is even more important than the compounding growth and when you're talking about how big your shovel is. So I just want to say,
Take a deep breath, don't put too much pressure on yourself that you create the potential for failure. Meaning that if you overwhelm yourself through all this season that you just don't accomplish anything, then take a deep breath and maybe you pause some of the financial stuff.
accomplish the school, accomplish the family, but then you get back to it as fast as you possibly can. Or you do what both of you try to max out the wrath, choose what the goal is that's attainable and doable right now that doesn't break the system and make that happen. But then you promise yourself while you're because, like I said, you're scared and purposeful.
If you do make any concessions, you promise yourself when you come out to your great, big, beautiful tomorrow at the end of this education goal and you get that great new job and you start making more money than you've ever made, you're going to be double on the discipline to pay back what you missed out on and opportunity costs and then some so that you do really get to build that just incredible vision for your future and maximize your financial life as well as live the memory building awesomeness of this sacrifice in the moment you're in.
I love it. Great. Well, thank you, Tori, for your question. Thanks for being back up. I love it. I'm just fine. I'm curious if you agree with this. I feel like we as humans often have this tendency that we overestimate what we're capable of when things are good. Like when life is going good, we're like, oh my gosh, I can, it's gonna get this much better and do this and do this and do this and do this and do this and we follow this trap of like really overestimating what is possible.
But I think on the flip side of that, when things are bad, I think we tend to underestimate what, oh, life is falling apart, things are hard, jobs gone, this is hard, this is hard. I just can't do anything. And in reality, maybe you can do more than you think. You can save that extra hundred dollars. You can. You still trying to win. You see this? I was like, man, what a good thing. This knucklehead is trying to win this thing, still. It's such a mess. Different strokes, that's all I'm saying.
Well, hopefully Dory can find the balance that works for them. Thanks for your question. I've got a question for you guys that's not on the hopper. So this one's going out on New Year's Eve. Okay. Are y'all excited about doing your net worth taking this? Oh! Body am I ever. I wouldn't say it's our favorite day of the year, but man, it is up there. I mean, around about this time of year, we start having a conversation. We start talking about, hey,
You're ready, you're getting ready, you're getting everything lined, you're looking at it. And it's awesome. And what I love, more than even like the point in time, Brian, because it's great seeing the point in time. What's my net worth today? How, you know, I love, because I use the tool that we, by the way, we make available for you at learn.moneyguy.com. I love using the tool to see what has changed from last year to this year. Realistically, what's changed from five years ago until today? And I just think it's awesome.
So I have to confess, and it's funny that Megan's asking this question is because yesterday my fidelity statement for last month showed up at the house. And I don't look at every month's statement, but I did look at this one and I was like, man, it is going to be fun to do that. I actually had that middle thought to myself. I was like, it's going to be fun doing the net worth statement this year because it's been a good investment year.
But I had that. So I'm already kind of starting to lick my chops and get excited about it. And Bo's exactly right. We eat our own cooking, meaning that the same template that we offer to you guys at learn.money.com is the exact same template that we use. And what I like about it is that dashboard view. It allows me to kind of see where are the debt set now, because they're going down every year. Where are the investable assets at? What are my three bucket strategies, meaning the after-tax assets, my tax-free,
my tax deferred. How are those things balancing out? And then one of my favorite things is, is just we're trying to always figure out the bowling point or if you're at the point where you actually make more money from your capital than you do from your labor, we have all that built into the dashboard. So this thing, if you're trying to figure out it, maybe you're new to this whole journey of building a net worth. By the way, if you are brand new and you just say, I appreciate the tool guys, but
I'm all about the free stuff. You can go to money.com slash resources. We have a great template there to just get the good behavior going. But when you get the point that you actually want to accelerate the journey and actually take an active role of seeing the metrics that are changing every year, I would encourage you to go check out that tool because we're very deliberate with how we designed it.
Are you, have you been a Megan, a net worth preparer for a long time? Are you new to like, what are you thinking about as it's almost net worth day? I'm excited. I wouldn't say a long time. I've only been working for like four years. So not a long time. Did you start at the very beginning? Yeah. Okay. Look at that. She's going to have it for the very beginning. I will say, I'm not going to say any names, but I had someone on the money got team.
who's kind of at the beginning of their journey too. And they said, I don't do it yet, because I just don't have enough variables going on necessarily. And I was like, no, no, no. I was like, I was like, you, I said, if I could go back in time, because I didn't start doing my net worth until I was in my early 30s, and I regret it.
because it's so fun, part of what we do with the visuals is you can see your changes over time. And it is so magical to watch compounding growth actually happen in real time for you. Not some theoretical thing when you watch one of our shorts or our videos where we show you the charts, but when you see it's your numbers and you actually get to see the compounding growth, don't take that from yourself. Go ahead, even if you only have
You started your Roth IRA last year and you have some student loan debt and you're just getting out of some bad decisions you made in college with credit cards. Just because it might be right at zero, even below zero, don't skip the step because your future self will thank you immensely if you start this as soon as possible. I think I did my first one at 20 years old. Yeah. Awesome. How much data did that? Oh, it's so fun.
Yeah, and even like starting out, it's still crazy seeing the progress from the beginning of the year. Like all the stuff that you forgot that you did. That's a little small. It's like Christmas morning, a little small decision. You made in January, February. You're like, oh, this is paying off by the end of the year. I think it's awesome. All right, y'all ready for the next question? Yes, ma'am. All right, this is from food number eight.
I said, hi, hi, money guy show. I am 30. It's abundance goals are pre-paid future expenses. I'm sorry, keep going. Now you're good. I'm 39 years old and on step eight of the food question, would you consider keeping your first home to rent out, then sell it and use the money for the kids college tuition? So a different take on saving for college. What are you all's thoughts on that? Okay. So.
Okay, this is the way to launch this. Money is nothing more than a tool that allows you to accomplish the goals that matter to you. And money is fungible, meaning money that you have in one place is still the same money, even if it's taken somewhere and used somewhere else. So there's a few different questions you have to think about. All right.
If I have my first home and I've bought that home and maybe I got a great deal on it and maybe I have a low interest rate and it's in a highly desirable area that's going to be easy to rent, it might make sense to rent that and I can rent that house and I have the low mortgage and I can charge enough rent that it cash flows and so the note's covering itself.
So long as I was able to save for a 20% down payment on the second house that I bought on my new primary residence, and I have enough capital, enough income, enough cash flow to be able to cover both mortgages comfortably, I don't think it's crazy if you want to continue to hold the first home and then down the road potentially sell it. Now, there are some tax consequences associated with that. Well, there are benefits to rental property and there's some deductions you can take there to offset that income.
One of the beautiful thing about primary residences is that when you do sell them, if you've lived in the home for two of the last five years, you get to exclude a lot of that gain up to $250,000 for single individuals, half a million dollar for couples. If you turn this property into a rental property and then you just decide to sell it seven, eight, nine years,
down the road so that you can pay for college. Now, rather than you having all that capital appreciation tax-free, you do have to pay capital gain taxes on that because it did become an investment, a proper investment asset. So I think you have to think through those contingencies as you go about navigating
I love that you got because you went through a lot of the technical stuff that I was sitting on. I was like, I hope we make sure we get the technical, but I want to talk about some of the mindset stuff that I see as a potential trap. First of all, congratulations being on step eight of the financial order of operations, reaching to where you're actually living in abundance and you get to think outside of just doing the basics is always something to be celebrated. So I'm super happy for you. But the thing I kept thinking about as I'm hearing this is that
It's amazing that you've got, you've got just primary residence sounds like the fact that it's appreciated and gone up. You want it to do everything financially. It's like choose one thing and then it's going to, it's goal is, it's got it.
That's exactly what I wrote down. It's a Swiss Army knife of your financial life. And the fact that it's your primary residence currently, you're going to move out, turn it into rental property. And then while you're going to sell it down the road, make so much money that you go pay for the kids college, it sounds great that this one thing, this one asset is going to do all these great things. But if you actually ever tried to do a home repair with a Swiss Army knife,
It sounds so good that you all you have to do is whip out this one tool and it is going to help you do this awesome thing. But I always find myself when like it because as a screwdriver function on it, it has, you know, both a Phillips and then the traditional screwdriver. But if you try to, you're like, that gummy, this thing in the right size, then I'm stripping out the screws, this stinks that the knife is dull.
because it's also only about this this long whereas I need something that can cut a little better and I end up getting so fed up and I'm like this thing would be great I guess if I got stuck on a on a deserted island I'd be glad I had this Swiss Army knife but this stinks compared to I'm just gonna go out to my my toolbox my full toolbox and we'll get a Phillips screwdriver that actually matches the size of the of the bit of the screw
I'm also going to just make sure that the knife I have is sharp enough and long enough that it can allow and cut this and maybe even need scissors instead of this feature and a scissors that aren't just this big like the Swiss Army knife scissors. So I end up getting so frustrated because it doesn't that one thing just even though it on the brochure it will do all these 12 features. It doesn't do any of them good and that's kind of what I feel like you're doing here is that
Your primary residence sounds like it potentially could do these things, but is it the best? And because I don't think it is necessarily because you have a choice. Let's take the primary residence. You do have a choice, rent it out or sell it. Bo gave you. If you sell it, there's some huge tax benefits, meaning tax-free gains for a married couple up to $500,000. That's nothing to sleep on. And by the way, you can still do both because you can rent it out for like,
two or three years, and as long as you sell, because it's two out of the last five years that you, you know, it was your primary residence, you could rent it out for a few years, see how that goes, and then still sell it for the tax-free gain, so you can kind of have it choose your own adventure. But then when it comes to kids' college,
I love 529 accounts. I mean, because they're tax-free growth, it's another way to get tax-free growth. And if you did this instead of relying on one asset, if you actually went to the full toolbox of your financial tools, you could be like, maybe I could take advantage of doing rental, but then I'll also take advantage of taking this tax-free gains. And then maybe I'm also in the background funding a 529 account for these kids so that I get tax-free growth
Do you see how all of a sudden this got a lot better instead of just using one tool and hoping that it fixes all your financial problems? Specializing and maximizing is definitely going to be your friend in this adventure.
how many home improvement projects have you tried to do with us? I mean, you know, pretty past. That was a great analogy and very passionate. No, it's one of those things because I do. I have a, is it a, oh gosh, because I have like three of them because they are very effective for doing Christmas lights. Oh gosh.
something with man in it. It's Toolman, Speakman. I'd have to, if I went on my Amazon history, I could tell you, because I bought like three or four of them. No, it's not a light, bright or a Christmas tree. I typed in tool for Christmas lights. No, type in Speakman tool. Okay. We should be doing this on.
Tell me more about it. It's a special tool that does Christmas lights. No, no, it has nothing to do with Christmas lights. It's just a great tool that can cut, it can strip wires, it can do. It does a lot of things. That's speaking claw.
the speedman claw. There's different tools. I use the scissors and cutting in and the stripping, wire stripping feature. But anyway, there are tools, but I find myself like screw, if you've ever used a Swiss Army knife for the screwdriver, it stinks. For all those things, I just told you. Yep. Wonderful.
So it's not actually, you aren't trying to do home projects, but you have a special tool. So Bo just took my masterful now and tried to see if he could minimize this. This is probably because I caught him the bad cop. No, it was an amazing analogy. You just spoke with such fervor and passion. I was like, I felt like I was in your house when you were getting frustrated with that knife. That's how much passion you brought to that analogy. I thought it was wonderful. Let me be clear. Do you have a Swiss Army knife? I have these Speakment tools.
I do have, no, you know what, okay, sidebar. I thought my first job ever out of college, I worked with the CPA firm, and at Christmas time, they gave everybody, all the associates, these Swiss Army knives. Had an accounting firm? Yeah, with the firm logo on it. And I had this thing for like good 10 to 12 years, it was only, it had a key chain on it, so it was on my keys.
And then one year TSA took it. I went to an airport. I was so sad when I was going through security. And it was my fault. I mean, I'm the idiot that goes through security with a Swiss Army knife on my key chain, but it was still it made me so sad.
Because that thing had my old firms, you know, logo was all faded off, you know, flaked off in my pocket. So it had a little sentimental, but it had a, and this is gross. Had a toothpick feature. That was probably the most used tool in there. You didn't use that. That's not normal for Swiss Army knives. No, it is. Oh, those little ones you slide out the toothpick. No, that's key for a good Southern boy. That is a key reading that you want to have there. And I don't know, it's hygienic. So you would use it? Yeah.
Cool. It doesn't kill you, it makes you stronger. Yeah, you got a great immune system. What did you say? A Bow and Wealth Christmas gift, 2025. There we go. How about I'll just give y'all, we'll order some toothpicks. Just a box of a bow tooth thing.
The Money Guy Show is hosted by Brian Preston. A Bound Wealth Management is a registered investment advisory firm regulated by the Securities and Exchange Commission in accordance and compliance with the securities, laws, and regulations. A Bound Wealth Management does not render or offer to render personalized investment or tax advice through the Money Guy Show. The information provided is for informational purposes only and does not constitute financial, tax, investment, or legal advice.
