WWYD If you came into a large sum of $$$$

[Minou]

Pay off the debts and buy a moderately-priced house. A good down payment should make the monthly payments affordable, especially since the other debt would be gone.

Better to live a nice life themselves rather than investing in an income property, investing the whole thing with small future returns, or being worried about leaving people an inheritance. When they hit retirement, they can always sell the place and move to something smaller/rent again if they want to free their money up at that time.

A market correction may have more of an impact in some cities than others. I'm sure there are a lot of people who have waited a long time for a market correction and been priced out of the market as a result. If we hadn't bought a house when we got married eight years ago, we would be strugging to afford that house if buying for the first time today.

[ashedfc]

There are some online banks that offer a 2% daily interest savings account (outlook financial, achievia finacial and more)

I would NEVER buy a whole life insurance policy.....being debt free is the best insurance....

You will get your 2% (no doubt) but what about the currency devaluation. The currency is devaluing more than 2% every year, & this is something which is hidden from general public. This way you are growing your money, but not protecting it.
My suggestion of Gold was based on protecting & growing not only the money, but also the value of money.
Here's the reason why, Gold will do both (grow & protect), specially in these times when central banks worldwide are busy printing money & devaluing currency..
Gold price in US Dollars (year ending price)
2000 -- $273.60
2001 -- $279.00
2002 -- $348.20
2003 -- $416.10
2004 -- $438.40
2005 -- $518.90
2006 -- $638.00
2007 -- $838.00
2008 -- $889.00
2009 -- $1096.50
2010 -- $1421.40
2011 -- $1566.80
2012 -- ?

There's a reason why rich people worldwide hold Gold in their portfolio..

For insurance- its probably the cheapest way to transfer wealth to kids (if you have any & love them).. paying debt is fine, but using the life insurance proceeds to pay the debt after death is smart financial planning.. (not everyone understands this financial planning approach)

[tjthemanto]

Thanks for all the advice. While they couldn't buy a house for that here they could do a condo or at least make a nice down payment on a house.

Im not 100% sure about their RRSP situation.

They are early to mid 30's and I doubt kids are in their future, but who knows

Depending upon where they live , buying a condo or house might not be a great option .

In overheated markets like Vancouver and Toronto a huge correction in real estate prices is coming in the next year or so as no one can afford to buy anymore. Also the new mortgage rules which just came into effect are not helping either.

But in places where the real estate market is not overheated and ridiculous , buying a house or condo might be a good option.

[Ciel]

Just a couple of thoughts come to mind:
1) is there a CRA tax amount due on that inheritance? The recipients should arrange for how to pay that.
2) if the recipients have not really explored their financial needs, they should each make a list of ideas on how to invest/spend the money then book a visit with a financial advisor, who might have questions for them to ponder and revise those lists with. Could be a good learning experience to set them up for more pragmatic future goals or possible philanthropy endeavour with the giver (of inheritance) in mind.

Seems that the couple are willing to think the matter over. Not everyone has the will to keep up their real estate investments nor the maintenance.

(Personally, I'd look into a really small starter home for myself or a good reliable used vehicle because I could use either one right now. Then have some money set aside for the operating costs. But once I determined what the income tax implications are over the inheritance, I would find a need to do a weeklong trip somewhere in Canada or go to Japan/Europe for a month and see the sights--bonus points if I could do so by private jet and avoid airport checks!)

[ashedfc]

Lots of suggestion to buy house - that's a perfect bubble phenomenon (when Toronto & Vancouver price goes down, other areas will also be affected).

Private jet, just to avoid airport check - I consider itan absolute waste of money...

My suggestion is to continue to like frugally & continue to do couponing & use smartcannucks, & feel as if nothing has changed.

[itchy54]

Hear ya ashedfc....i was just suggesting a holding spot until they figure things out....and i believe gold was around 1800 recently, it has dropped, so a short term might not be great...and it might be great. I am not that much of a gambler.

[harbie]

Depending upon where they live , buying a condo or house might not be a great option .

In overheated markets like Vancouver and Toronto a huge correction in real estate prices is coming in the next year or so as no one can afford to buy anymore. Also the new mortgage rules which just came into effect are not helping either.

But in places where the real estate market is not overheated and ridiculous , buying a house or condo might be a good option.

They are in the Vancouver area and like I said they don't plan on purchasing right now because of the high market. Like someone else mentioned about waiting too long and being priced out of the market, I don't think that this will happen I believe we are in for an adjustment so they as well as DH and I plan to wait a bit longer

Thanks for all the advice everyone

I should really get the to find out about the CRA tax thingy. Thanks

[harbie]

2000 -- $273.60
2001 -- $279.00
2002 -- $348.20
2003 -- $416.10
2004 -- $438.40
2005 -- $518.90
2006 -- $638.00
2007 -- $838.00
2008 -- $889.00
2009 -- $1096.50
2010 -- $1421.40
2011 -- $1566.80
2012 -- ?

If only I could go back in time with this kind info . I'm guessing a lot of us would like that

[ashedfc]

Several municipalities in US are goIng bankrupt; & at the same time sovereigns in Europe are goIng bankrupt.
Libor scandal recently exposed & it's the biggest scandal in the history of the financial markets,,,,, events are unfolding much faster then expected.
Couple years down the lIne the current gold price will look like a bargain.

[Ciel]

Here's what I don't understand about gold as an investment in case paper currency jumps the shark in a very bad economic scenario:
If I had a gold coin and needed to use it to buy grocery staples, how would the change from the purchase be recorded or offered?
Who would set the value of that coin's purchasing power and who would regulate the circulation of the gold coins?
Who would recognize my change back as valid currency to be used to purchase other things or services?
All I can think of is that abacuses will be the rage then.

[cath007]

OMG...that an incredible inheritance money!!!!!

[Retiree]

Interesting discussion.

My first thought would be to pay off any credit card debt. I would then max my TFSA to $20,000. Next, I would top up my RRSP. Since the housing market is in Vancouver, I'd probably wait for a market correction before I considered buying, especially since this couple's rent is reasonable. Finally, I would invest most of the rest, half in GICs and half in an income producing mutual fund where I could re-invest the income each month and watch it grow, until I was ready to get into the housing market. At that time, I would either withdraw my downpayment from my TFSA and/or income producing mutual fund, depending on how much I needed.

[Brad]

I would invest it in low-risk dividend paying stocks such as banks, telecoms, pipelines, reits, etc. These yield around 5-6% annually. On $200,000 that is $12,000 a year, and that's before you count any capital growth.

I would not buy a house right now as many are predicting a real estate correction soon, if you wait a few years you could save lots of money. Investing in a condo is a terrible idea right now as the market rent rates are currently not high enough to cover expenses, you would have negative cash flow. At least that's the case in most cities in Canada currently, I guess some housing markets (like Windsor) are more reasonable.

[matrix82]

Pay off all debt, and then put the rest into a high interest savings account.

[anisa]

it would be hard to advise someone of what to do unless you know how they personally view their whole financial outlook on life and living.

there will be the ppl who will tend to play the numbers game and carry a bunch of debt and investment accounts to squeeze the most potential out of their money.

i'm more of the boring type who would pay off all debts, just to be free of it. i don't like owing anyone money. then i would put the rest in a modest, stable investment account.

to me, peace of mind and ease of living is more important than chasing $$. but that is just me. i'm also the person who does poorly at commission jobs because i would rather be the most helpful than be the biggest closer.

i don't know if that makes sense.

anyhoo, it really depends on the person's life priorities, i don't think any one answer is right.