You both have valid points. Mike wants to take advantage of “buy low” opportunities and your concern regarding escalating living costs renders the need for income producing assets. However, I am on your side of the fence -- investing all/holding the money in a flip can be risky, particularly if we stay in the slump for some time. You lock your money up until the house is sold and there are many unknowns. You might look, instead, for undervalued rental opportunities in good neighborhoods that can generate income right away (depending on your tax situation) or consider allocating the inherited monies across a broad spectrum of investments (stocks, bonds, CD’s, money market funds), including solid real estate investment trusts or funds.

This really isn’t a question of who is right or wrong, but rather an opportunity to consider what to do with a windfall such as an inheritance. It appears that you have been saving and investing for your retirement and believe that you will be able to live comfortably. However, your concerns about the rising costs of health care and utility prices are valid and appropriate given our current economic situation. Investing in real estate has traditionally added a very nice non-correlating asset to a portfolio. Non-correlating simply means that an investment will increase or decrease in value independent of the performance of other investment categories such as stocks or bonds in this case. Having said that, it is difficult to predict how long you may need to maintain the real estate you purchase now before selling it at a profit. Since you will most likely rent the house that you buy, an additional consideration is whether or not you are prepared to become landlords until the house sells. Given that you are less than 10 years away from retirement, it would make sense to evaluate your entire portfolio and determine not only if you are well diversified and how you should be invested going forward, but most importantly to develop a strategy for distributing your retirement assets. All that means is determining when the specific investments you have will provide you with income during your retirement. A good financial plan should have an income distribution strategy at its core. Once you have done that you will have a better idea of the appropriate investment vehicle for your inheritance. And that may include using part of it for something you’ve wanted, or wanted to do, like a nice vacation!

This is a hard question to answer without knowing the entire financial picture of the couple. However, if they do have adequate retirement savings, and they receive an unexpected lump of funds, then they may have the ability to expose those funds to additional risk. The question would be what is the ultimate purpose of the funds, what will they be used for? If the intent is that they may never be used and passed onto the next generation, than growth may be a good objective. If they want to use the funds to further subsidize their retirement or provide a buffer for poor investment performance, than they may want to be more conservative. What they should do is sit down with a financial adviser who can review their entire situation and help them make a plan for where to best invest the funds. This will help them make the best decision!

Before we decide who’s right, let me congratulate you on doing such a good job raising your children. There are a lot of readers who envy your statement of “self-supportive” when it comes to young adults. It also sounds like you have done well saving money in your retirement plans and retiring debt (mortgage paid off in three years). As far as your question as to who is right on what to do with the $230,000, you both have valid points in my opinion. If you are really worried about costs going up in certain areas, you should keep a chunk of money above and beyond your normal emergency fund in a liquid account (check out hsbcdirect.com, indymacbank.com and bankrate.com to see what current yields are). As far as flipping houses, your husband may know where one or two really good deals are, and by putting some sweat equity into the home could turn a nice profit. The question is how long are you willing to wait for that profit? Remember, you’ll also have to carry the normal costs of carrying an investment property before you sell it. Home prices may continue to fall and there is quite a bit of inventory for realtors to whittle through. Maybe you can compromise and do both, pad-up your emergency reserves and use some of the inheritance to buy a property. In any event, you should make sure that you and your husband have agreed on a well thought-out game plan.