The principle of "Pop"

Question: Hi, how do we deal with an inheritance in an intelligent and fiscally sound manner? Thank you! Steve, Drexel Hill, PA 

Answer: My basic advice on receiving an inheritance is the same, whether it's a little money or a lot: Preservation of principal, or “Pop.” In other words, don't do anything precipitous with the money. Stash the money in safe places, like federally insured accounts. Take your time to think about what you want the money to accomplish.

The inheritance is an opportunity to think about goals and desires. The inheritance might go toward paying for college, paying off some debts, or bolstering emergency savings. It could go toward funding a career change, a memorable family vacation, or a course at a local community college. 

It’s useful to think about using the money to reflect your goals. It’s also helpful to imagine what the late parents would like the money to go for. Are there ways to spend or invest the inheritance that reflect their values? 

These are the kinds of questions I would ask to deal with an inheritance in an intelligent and fiscally sound manner. Meanwhile, you want the value of the inheritance to be stable and the money accessible when you finally develop a plan. Don't listen to anyone that pushes you to invest it aggressively.

Good luck.

About the author

Chris Farrell is the economics editor of Marketplace Money.

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