Did You Recently Inherit Money? Don’t Know What To Do?

Don't let sentiment influence the way you handle an inheritance. A portfolio of bonds makes no sense if you're depending on asset growth to finance three decades of retirement, for example. Or perhaps your benefactor hung on to a large stock position to avoid a big tax bill. With the tax slate wiped clean, this could be the time to sell and start fresh.

If you plan to work for another decade or longer, you can afford to take more risk, putting 80% or more of your inheritance into a diversified mix of stocks or stock funds. But if you plan to retire in less than 10 years, keep one-third of the money in bonds. And if you're ready to retire and need to tap your investments for living expenses and up your bond allocation to 40%, with the remainder in stocks.