We inherited $1.5M. My siblings think it's their lifeline. I disagree.

Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below.

A couple in their late 50s inherited $1.5 million after her mother passed away earlier this year. His siblings, who co-own a hardware store that's lost money for two of the last three years, have suggested the couple "invest it locally" by putting a six-figure sum into the business to help keep it afloat.

The couple isn't obligated to use an inheritance from her side of the family to rescue a struggling business they don't own or control. While supporting relatives is a personal decision, concentrating a large portion of retirement savings in a single company with a recent history of losses carries significant risk. A diversified investment strategy—including, where appropriate, commercial real estate alongside other assets—can reduce concentration risk far more effectively than committing a large sum to one local business.

Want rental property income without fixing leaky faucets or screening tenants? Arrived lets you invest in rental homes starting at just $100

AI Needs More Power Than The Grid Can Easily Provide. This Startup Is Taking A Different Approach To Energy Storage.

In most states, inherited assets are generally treated as separate property as long as they aren't commingled with marital assets. That means the inheritance is typically hers to direct, even though his siblings are asking the couple to invest it.

The hardware store's recent financial performance also deserves careful scrutiny. Two losing years out of the last three should prompt detailed questions about the business's future before anyone considers investing.

The Risk Of Concentrating Retirement Savings

Putting $200,000 or $300,000 into a single struggling retail business ties that money to one location, one industry, and one management team. If the business continues to struggle, it may be difficult to recover the investment quickly.

At 58, with retirement approaching, many investors would hesitate to concentrate that much of their portfolio in a single stock or private company. A family business doesn't automatically become a safer investment simply because relatives own it.

Trending: It's Hard To Pay Down Debt If You Don't Know Where Your Money Is Going. Albert Helps Bring It Into Focus.

Depending on their overall financial picture, the inheritance could leave the couple meeting the SEC's accredited investor standards, which generally require either a net worth exceeding $1 million (excluding a primary residence) or qualifying income levels.