How should I invest a lump-sum inheritance to add value to my savings?

I am 35 years old and currently following all the great advice prescribed by financial planners such as putting $18K pre-tax into my employer's 401(k) plan and receiving a $7K match. I went ahead and started contributing the after-tax portion which brings the total annual savings to $52K per year. I used to be able to contribute $5,500 into a Roth IRA, but can no longer do that due to the IRS income limitations. I funded a Whole Life Insurance policy with 5 year premiums at $20K per year to secure my family in case something happens to me and so they can accumulate cash value along the way. I also went ahead and started investing approximately $500 to $1,000 per month in California Muni Bond Funds. I am expecting to receive a $100K inheritance and wanted to know what the best strategy is for investing this money? I am not looking for something active/risky like owning Real Estate or funding businesses, but prefer something passive with no headaches. What do you recommend?

Financial Planning, Retirement Savings, Investing
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May 2017
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Think of your financial net worth as an "overcoat" with many pockets. You may have stocks in one pocket, munis in another, etc., but when you decide how to allocate assets between stocks of various types and fixed income of various types, think about the whole coat. Reading between the lines, I can conclude that you have more than enough current income to live on. Assuming you are reasonably secure in your job, lean heavily toward equities.

I agree that munis are good diversification and a source of decent after-tax returns. But in general, bonds may suffer in a rising-rate environment so stay light in that sector.

When you get the $100,000, it just adds to one of the pockets. If you are planning to keep, say, a 75% - 25% equity/fixed strategy going forward, invest the inheritance accordingly. Don't consider it a separate entity.

May 2017
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