‘Finance makes me break out in hives’: I inherited $240K from my parents. Do I pay off my $258K mortgage and give up my job?
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“I inherited $240K. Do I pay off my $258K mortgage and downsize my house and job?”
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July 6, 2025
10:30 AM
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Advanced ➔ Results The Moneyist‘Finance makes me break out in hives’: I inherited $240K from my parents
Do I pay off my $258K mortgage and give up my job. ‘I inherited $240K
Do I pay off my $258K mortgage and downsize my house and job. ’Last d: July 6, 2025 at 6:30 a
ETFirst Published: June 30, 2025 at 5:30 a
ETResizeListen(10 min)“I don’t know if I should invest it, pay off my mortgage, aggressively, or downsize to a smaller and invest the ceeds. ” (Photo subject is a model. ) Photo: Getty/iStockphotoDear Quentin,I recently lost both my parents and inherited $240,000
Due to life choices (divorce) and living paycheck to paycheck until recently, I do not have a lot d for retirement
I am 58 years old and make a decent living of $130,000 per year
I have $100,000 d for retirement excluding my parents’ money
I owe $258,000 on my mortgage on a house worth $825,000
I am not looking to retire before 65, but am hoping to downsize and maybe take a less stressful job for half the money if I can find one
I’m really confused what I should do with my parents’ money to set myself up for a solid retirement
I don’t know if I should invest it, pay off my mortgage, aggressively, or downsize to a smaller and invest the ceeds
I’ve never had money in the bank until the last couple of years and I don’t know how to be smart with it
I am paralyzed by the choices and have a low risk tolerance
I am aware of how hard it is to come by and don’t want to do any risky gambles
I currently have most in a CD at 4% and the rest in a high-yield savings account
Finance makes me break out in hives
What is the smartest move
Cautious & NervousRelated: I’ve been a stay-at- mom for 10 years
Do I take a part-time job to spend more time with my kids or get a job for six figures
The smartest move is to make lots of small, considered moves over time, ideally with the advice of a financial adviser
Photo: MarketWatch illustrationDear Cautious,Stress is an inside job
It won’t necessarily go away in a part-time job that pays you less
Your anxiety may be voked by the seemingly overwhelming amount of choices you are giving yourself, rather than your inability to manage your finances
You’ve also lost your parents and you may not even realize how traumatizing and life-altering that is for you
We should avoid making life-altering decisions when we are grieving
We want to start anew, but sometimes maintaining the quiet quo is the best way forward, for now, and the most difficult
The smartest move is to make lots of small, considered moves over time, ideally with the advice of a financial adviser — a fiduciary who must put your interests before your own, and not a person who wants to earn a commission and sell you a rake of ducts that you don’t understand
It starts with your, and whether to downsize (yes, if you feel comfortable) and paying off some of your mortgage (yes again, if that’s important to you)
It will shorten the term, remember, not reduce the monthly payment
You have already set aside $100,000 for retirement, so your aversion to dealing with monetary matters is not matched by your aversion to saving
The $240,000 won’t disappear
It recently landed in your bank account, and there’s no bad fairy that says you have to invest or spend it within the next 30 days
Take your time; it’s not burning a hole in the walls of the bank
You can make one decision at a time
You have already set aside $100,000 for retirement, so your aversion to dealing with monetary matters is not matched by your aversion to saving
There’s no “right” answer to your questions
The decision to pay off your mortgage early would also depend on your timeline to freedom from debt by the time you reach retirement age, and your current interest rate
If you’re paying a 6. 5% 30-year fixed mortgage rate, it makes sense to pay off some early, given the savings in interest
If you have a 2. 5% interest rate, you may be more comfortable paying off at least $100,000 of that loan
Nora Yousif, an RBC Wealth Management financial adviser based in Boston, commends your achievements thus far. “Your instincts are spot on,” she said. “Saving, downsizing and are the name of the game here
Start maxing out your 401(k) to help you rebuild your nest egg since you are in the last inning, so-to-speak, of your career, which means you can sock away as much as $31,000 per year
Between the ages of 60-63, you could up the ante even more and up to $34,750 per year. ”Don’t miss: What on Earth is going on with the American consumer
A cure for financial anxietyThat still leaves you with your $240,000 inheritance, and whatever you have if you sell your house and move to a smaller perty
You could take at least half of that money and invest it in stocks
If you feel confident the long-term future of U
Equities, you could also invest a portion of your inheritance in an exchange-traded fund that tracks the total market, the S&P 500 SPX or another diversified index (perhaps the Vanguard Total Stock Market ETF VTI)
As I told this reader who wondered whether they should accept a $61,000 lump sum or $355 monthly payment for life, take the $61,000 because if the stock market averages 10% returns per year (as it has done for the last three decades, if you even out the bumpy with the smooth), you are earning money on your principal investment and also on the annual returns on your investment
Plus, you need an income during retirement, which could last 30 years
I have a cure to excessively low risk tolerance and financial anxiety, and that is some easy math
If you invested $100,000 in the S&P 500 with a 10% annual return, you would end up with around $672,750 after 20 years due to the magic of compounding
If, on the other hand, you put $100,000 in a CD with a 4% interest rate, you would have around $219,112
Balance your life goals with your investment goals
Historically, the market is a win-win over the long term
It’s smart to have an emergency fund of six to 12 months’ worth of expenses, and to make an effort to make money while you sleep
Five years after the pandemic, as the Federal Reserve weighs up whether it’s time to cut interest rates and wonders whether global socio-economic unrest and President Donald Trump’s trade war will push the U
Into an economic slowdown or recession, a cash cushion will give you more peace of mind
Don’t miss: Recession indicators are out of control
When will this madness end
Seeking out diversificationFor safer havens, look at shorter-duration bonds with a maturity of less than five years; Treasury inflation-tected securities (TIPS), which are inflation-tected bonds issued by the U
Treasury; and mutual funds and exchange-traded funds
Morgan Stanley MS cites possible upside in “value-oriented and defensive sectors. ” So-called defensive sectors include nondiscretionary consumer goods, utilities and healthcare stocks
As you enter your 60s, Charles Schwab SCHW, the financial-services company, says a portfolio with a “moderate” risk would comprise 60% stocks, 35% bonds and 5% cash or cash investments
When you reach 70 to 79, it recommends moving to a “moderately conservative” portfolio of 40% stocks, 50% bonds and 10% cash or cash investments, while for 80 and above, a “conservative” mix of 20% stocks, 50% bonds and 30% cash or cash investments would work best
The decision to pay off your mortgage early would also depend on your timeline to freedom from debt by the time you reach retirement age
This will hopefully go without saying, but please don’t buy individual stocks
Some fixed-income index funds or ETFs pay monthly dividends, while dividend-growth or high-yield ETFs allow you stock exposure with an emphasis on dividend income
Certificates of deposit (CDs) and high-yield online savings accounts, which are offering yields of up to 4. 4%, respectively, are a low-risk option
There are important differences between high-yield savings accounts and CDs
With the high-yield savings account, funds are more liquid, although withdrawals are limited to half a dozen per month
With CDs, you are committing to a set period of time
Interest rates can also change with high-yield savings accounts — even after you deposit your money — based on the Fed’s benchmark rate
When you buy a CD, the rate does not change
With less risk comes less reward. “While CDs are safe, they may not generate the kind of returns you’re looking for,” Yousif adds
With interest rates at 20-year highs, there are many exciting fixed income opportunities out there
Given your risk file, bonds may offer an attractive alternative as you consider branching out from CDs. ” However, she s your plan to downsize and buy something for half the amount. “You’ll knock off your monthly mortgage payment freeing up your cashflow to be able to. ”Choices come with a lot of responsibility, but they are a newfound luxury you can afford
Related: ‘He was very paranoid of banks’: My mother found $35,000 in cash after my father died
What should she do with it
You can The Moneyist with any financial and ethical questions at qfottrell@marketwatch
Com, and Quentin Fottrell on X, the platform formerly known as Twitter
The Moneyist regrets he cannot reply to questions individually
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The Author Quentin FottrellQuentin Fottrell is MarketWatch's Managing Editor-Advice and The Moneyist columnist
You can him on Twitter @quantanamo
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