What to Do With a $400K Inheritance
A $400,000 inheritance is serious wealth. Here's how to manage it wisely with professional guidance.
Key Takeaways
- 1At $400k, assembling a professional advisory team is essential.
- 2Take at least 6 months before making any major decisions.
- 3Diversification across asset classes, account types, and geographies is critical.
- 4Physical gold allocation provides insurance against systemic risks.
- 5Update your own estate plan to protect this wealth.
- 6Don't let lifestyle inflation consume this generational wealth.
Building Your Advisory Team
At $400k, you need more than DIY investing. Build a team of professionals:
- Look for "fee-only" AND "fiduciary" credentials
- Interview at least 3 of each type before choosing
- These professionals should communicate with each other
- The cost of advice is tiny compared to potential mistakes
| Professional | Role | Expected Cost |
|---|---|---|
| Fee-only financial planner | Overall wealth strategy | $2,500-5,000 plan |
| Estate planning attorney | Trusts, wills, asset protection | $2,000-5,000 |
| CPA/Tax advisor | Tax-efficient strategies | $500-1,500/year |
| Insurance professional | Risk management review | Varies |
Wealth Management Principles
Managing $400k requires a different mindset than managing smaller amounts:
- **Preservation first:** Don't lose what you have
- **Growth second:** Compound over decades, not months
- **Tax efficiency:** Every dollar saved in taxes compounds
- **Liquidity management:** Emergency reserves + accessible funds
- **Estate planning:** Protect wealth for next generation
- **Behavioral management:** Protect against your own impulses
The Biggest Risk Is You
At $400k, bad investment returns aren't your main risk. Emotional decisions, lifestyle inflation, and "great opportunities" from friends are far more dangerous.
Multi-Dimensional Diversification
True diversification at $400k means spreading across multiple dimensions:
- **Asset classes:** Stocks, bonds, gold, real estate, cash
- **Account types:** Taxable, traditional IRA, Roth IRA, Gold IRA
- **Geography:** US, international developed, emerging markets
- **Time horizons:** Short-term liquidity, medium-term, long-term
- **Risk levels:** Conservative core, moderate growth, small aggressive
- **Counterparty:** Multiple institutions, physical assets
Exploring your retirement options?
Our 60-second quiz matches you with the right account type
Choosing the Right Advisors
How to find trustworthy professional help:
- **Fee-only:** Paid only by you, not commissions
- **Fiduciary:** Legal duty to act in your best interest
- **CFP designation:** Certified Financial Planner credential
- **NAPFA member:** National Association of Personal Financial Advisors
- **Experience:** Ask about experience with inheritances specifically
- **Chemistry:** You need to trust and communicate well
Red Flags to Watch For
Avoid anyone who: contacts you unsolicited, promises guaranteed returns, pressures quick decisions, won't explain fees clearly, or dismisses your concerns.
Suggested $400K Allocation Plan
A comprehensive allocation strategy for long-term wealth:
- The Gold IRA provides crucial diversification outside paper assets
- Adjust allocation based on age, other assets, and risk tolerance
- Rebalance annually to maintain target allocations
| Category | Amount | Percentage |
|---|---|---|
| Emergency fund/cash | $30,000-50,000 | 8-12% |
| Gold IRA | $40,000-60,000 | 10-15% |
| US stock index funds | $120,000-140,000 | 30-35% |
| International stocks | $40,000-60,000 | 10-15% |
| Bond funds | $60,000-80,000 | 15-20% |
| Real estate (REITs) | $20,000-40,000 | 5-10% |
| Discretionary/enjoyment | $20,000-30,000 | 5-7% |
Don't Become a Target
Keep your inheritance private. Once people know you have money, you'll face requests for loans (never repaid), investment "opportunities" (scams), and changed relationships. The amount should be known only to your spouse and your advisors.
Protect Your $400K With Physical Gold
A $400k inheritance may represent a lifetime - or multiple lifetimes - of work. Physical gold provides insurance against risks that diversified paper assets cannot hedge.
- Allocate $40,000-$60,000 (10-15%) to a Gold IRA
- Gold has preserved wealth through every financial crisis in history
- Protection against inflation, currency devaluation, and systemic risk
- No counterparty risk - you own the actual metal
- Provides portfolio insurance during market crashes
- Same tax advantages as traditional retirement accounts
Frequently Asked Questions
1Should I quit my job with a $400k inheritance?
Probably not yet. Using the 4% rule, $400k generates about $16,000/year sustainably. Most people need more than that. However, this inheritance could let you take a lower-stress job, go part-time, or retire 5-10 years earlier. Keep working while this money compounds.
2How much should I pay a financial advisor?
For a comprehensive financial plan: $2,500-5,000 one-time fee. For ongoing management: 0.5-1% of assets annually ($2,000-4,000/year on $400k). Avoid anyone charging more than 1% annually or pushing expensive products. Fee-only advisors are typically more cost-effective.
3Should I pay off my house with this inheritance?
It depends on your mortgage rate and personal values. If your rate is under 4%, investing may generate higher returns. If above 6%, paying it off is a solid guaranteed return. Many people value being debt-free regardless of the math. Don't use more than 50% of the inheritance on the house.
4What if I have multiple heirs to consider?
If you need to share the inheritance or want to set aside portions for your own heirs, work with an estate planning attorney. Options include trusts, 529 plans for education, or custodial accounts for minors. Don't give significant amounts until your own retirement is secure.
Related Articles
Helpful Guides
Interactive Tools
Ready to Protect Your Retirement?
Join thousands of Americans who have secured their savings with physical gold. Augusta Precious Metals makes the process simple.