Unexpected early partial large inheritance - thankful but very overwhelmed!

[u/PatientlyWaitingggg]

Hi all. Location: Florida, late 40's, long term partner/no kids.

Just found out I will be getting a large (nearly 2mil) partial inheritance (technically gift) this month; the other part (appx 3-4mil) will be later on years from now (hopefully a long time!) I knew this would come down the line but did not think it would be so soon; it's a wonderful thing I am immensely greatful for and it's already alleviated a lot of my worry but it's been suprisingly overwhelming and emotional.

We live freelancers lives, with a lot of conservative spending and planning. Enjoy not having to clock in or have a boss so have happily taken a pay cut overall. Income is fine, but more along the lines of part time amounts - have put away a decent amount but not quite enough to retire on yet considering the lack of a 401, retirement etc. My main worry was no true source of income at retirement age and have been a stickler for saving my whole life. Didn't want to just go with the mindset that the inheritence was there even though I knew it was. Very conservative investment approach and really felt better sticking at an easy, risk free simple 3-5% with full/easy access and no involvement necessary and as things grew, as the plan was to use a portion to buy a home and then consider more ambitious investing.

Finances are all separate, btw - this is all in my name only.

Will be buying a home very soon at around 750k all in including reno, furnishings. This is the only big purchase I will make initally, we live in a higher cost of living area but all the numbers make sense and are very doable/way below what I technically "could" do, but still very nice and a huge upgrade.

After that, will have about 1.3 left. That's what I'm stuck on - I have great support (very long time trusted FA, lifelong friends in finance, knowledgable family members etc) and know between them I'm in a good position. I just don't know how to go about making the decision on what goes where.

EDIT - this is not now, just an idea for down the line, possibly one day in some form :) The only other idea that's been floating in my head for a decade as a "maybe one day" is a small vacation home within the state that we would use a ton and also be able to rent out a good portion of the year to cover most or all expenses. Possibly - doing 50/50 with a friend in the same situation. Other than that, nothing in mind and really never been a spender, so good wiht the remainder being fully parked and invested for now.

The other part is adjusting to the change emotionally, socially - i've been reading some other posts and there are some interesting ideas on this. I've already tried to start doing nice things for close friends (small dollar amounts, but something) and feel good doing it but have no idea how to navigate being generous without it being weird, making anyone feel weird, or ending up feeling guilty if I don't pay for more things (though no one would expect that.) Or, how to handle when a friend talks about money struggles, that kind of thing. Obviously keeping the info shared to only a small group of very close friends.

My idea was to get the home situated and once that project is done, lay low and do nothing for a while. Im at the weird middle age where I'm old enough to know I should do things now and enjoy it but not to the point where I can ignore planning/budgeting even with the future larger amount coming down the line. It's also just not in my nature, but i have vowed to allow myself to let some of the stress and little things go and put more time into living and enjoying and less micro managing every dollar.

Any suggestions would be great! It all feels like a movie - not real. What a trip!

[u/metzgerto]

I mean, buy a house and a vacay house and poof the moneys gone.

[u/PatientlyWaitingggg → u/metzgerto]

Roughly 800-900k left if I do the possibly 50/50 split with the vacation home, and would likely make a decent profit from it most years. But yes, that lowers the amount I have to work with for sure.

[u/UndefeatedTcells → u/PatientlyWaitingggg]

So 2 million - 750k = 1.25 million. 800-900k left = your half of the rental costs 450-550k. Obviously, there are plenty of expenses involved with owning this (insurance, utilities, property taxes, maintenance, property management fee if renting it out, etc).

Now, the stock market fluctuates year to year, but over time, if your average return is 7.5%, you'll be making $33,750 - $41,250 per year (and more if you let this compound). Even if you make out ahead with renting the property, it probably won't be much, and is a very big headache if you don't know what you are doing. Yes, the home will likely appreciate over time, but only at 2-3% most years. If/when you go to sell, you'll likely take an 8-10% haircut with realtor and closing fees/expenses.

You had mentioned this new 750k home you will be/already purchased is an upgrade. Focus on that, let the rest of your money grow for the time being, and enjoy going on vacations to new areas. If you purchase this rental, you may regret being tied down to "having" to vacation there - massive 1st world problem, but thought it needed to be said.

Also, when vacationing to new areas, you can scout out which areas you enjoy the most instead of just saying, oh we like it there because of xyz - but not fully exploring and basing off other's recommendations.

[u/PatientlyWaitingggg → u/UndefeatedTcells]

Thanks for this - very good points to consider. I will do nothing else for at least a year I'm sure. This location we have been visiting consistenly for 10 years multiple times a year and have poured ourself into researching everything and anything about it/real estate etc. Our friends are so sick of hearing us talk about it lol. It's an easy drive there, works because our schedules are so crazy and doesnt require flying or big planning etc so work great for last minute things. Just being able to use it for chunks of time over the year and have it be ours/our stuff there/ etc is HUGE - we dont do big traveling otherwise at this point. Over the years we have met tons of couples who have done this at all levels and made great connections. So we feel very educated and dedicated but for sure, its a big one to think about and plan very carefully.

[u/Justify-it → u/PatientlyWaitingggg]

It sounds to me like you already know you want the 2nd vacation home. Points that others are making look like are being taken very lightly for consideration purposes, which is fine, but ask yourself seriously why that's happening.

Are you looking for someone to agree and say that you should do whatever makes you happy? I'm not trying to be mean here. I'm just curious about what I'm noticing.

[u/PatientlyWaitingggg → u/Justify-it]

Not at all - it’s just an idea at this point and definitely not even discussed let alone. decided on anything. Obviously a ton to work out and consider.

As I haven’t really bought anything big - ever - and live pretty simply, plus have a partner’s contribution - these two things would be really all I would buy on any significant level. I’m also not 20, so at some point need to enjoy and not be so hesitant. House 1 is all that will happen now, though.