I'm a poor who is about to receive an inheritance: please tell me what to do with it

[Anonymous]

I'm LMC (at least for the DC area). I'm about to inherit around 700K.

My first priority is to stow the money away for DC's college (we've only managed to save about 50K for their college to date). Should I throw it all in a 529? Or should I put it into our retirement fund, and saddle DC with college loans? Or a split between the two?

Or other possibilities? I really know nothing about money because I've never had enough to learn. What do you wise UMC money-having people recommend?

[Anonymous]

Well first of all you cannot legally put 700k into a 529, nor should you want to. How old is DC? I'd put $100k into the 529 and consider it funded if the kid is under 12. Put the rest into a brokerage in your name and invest in something very diversified - a total market or S&P 500 mutual fund or ETFs. Don't look at it, and leave it alone until DC gets to college or your retirement, whichever comes first.

[Anonymous]

dumping it into college funds is only better than lighting it all on fire.

Take care of your debt and retirement and savings first.

[Anonymous]

Anonymous wrote:I'm LMC (at least for the DC area). I'm about to inherit around 700K.

My first priority is to stow the money away for DC's college (we've only managed to save about 50K for their college to date). Should I throw it all in a 529? Or should I put it into our retirement fund, and saddle DC with college loans? Or a split between the two?

Or other possibilities? I really know nothing about money because I've never had enough to learn. What do you wise UMC money-having people recommend?

personally I would not ask UMC people because your concerns are not theirs. they have retirement and college paid for.

you need to run the numbers and figure out what is best for your future, and therefore, your children's future. do you have any debt outside of low debt (mortgage, 0% cards, etc?)? how many children do you have? when is your mortgage paid off? how many years until college? are you positive your kid will want to attend college? how much are you willing to put aside- public or private costs? how much retirement funding do you have?

I am of the belief that college savings comes 2nd to retirement and no debt. there is no guarantee my kid will want to go to college, retirement is something we absolutely need and i don't want my kids responsible for me/us because of lack of retirement funds.

your child may get scholarships or other means to pay for schooling. if you really want to set funds aside, then i would set 4 years of tuition aside in a high yield account (talk to a fin adv about the best one) and then gift any remainder at 30 or some age to help with DP/etc.

the rest should be used towards debt and retirement.

[Anonymous]

Also a LMC person. I would meet with a fee-for-service financial advisor for advice. Personally, I'm prioritizing retirement (which is usually what experts suggest) so I would put the majority in retirement and a bit in the 529. For college, I think I have a solid plan that will get DC through any of our state schools taking only sub/unsub loans but I've been setting expectations (yes there are a million schools but you will be going to one that is low cost or where they give you a ton of money-and it's not easy to get that that money) and talking about options like 2+2 (in my state you can do 2 years at cc and get an automatic admit to our state flagship if you maintain a 3.0 or higher at cc).

[Anonymous]

Anonymous wrote:Well first of all you cannot legally put 700k into a 529, nor should you want to. How old is DC? I'd put $100k into the 529 and consider it funded if the kid is under 12. Put the rest into a brokerage in your name and invest in something very diversified - a total market or S&P 500 mutual fund or ETFs. Don't look at it, and leave it alone until DC gets to college or your retirement, whichever comes first.

Look into something like VTSAX, or similar, then don’t look at it until retirement. The will likely fully fund your retirement. Also take a vacation or something, have to enjoy life now as well!

[Anonymous]

Anonymous wrote:

Anonymous wrote:I'm LMC (at least for the DC area). I'm about to inherit around 700K.

My first priority is to stow the money away for DC's college (we've only managed to save about 50K for their college to date). Should I throw it all in a 529? Or should I put it into our retirement fund, and saddle DC with college loans? Or a split between the two?

Or other possibilities? I really know nothing about money because I've never had enough to learn. What do you wise UMC money-having people recommend?

personally I would not ask UMC people because your concerns are not theirs. they have retirement and college paid for.

you need to run the numbers and figure out what is best for your future, and therefore, your children's future. do you have any debt outside of low debt (mortgage, 0% cards, etc?)? how many children do you have? when is your mortgage paid off? how many years until college? are you positive your kid will want to attend college? how much are you willing to put aside- public or private costs? how much retirement funding do you have?

I am of the belief that college savings comes 2nd to retirement and no debt. there is no guarantee my kid will want to go to college, retirement is something we absolutely need and i don't want my kids responsible for me/us because of lack of retirement funds.

your child may get scholarships or other means to pay for schooling. if you really want to set funds aside, then i would set 4 years of tuition aside in a high yield account (talk to a fin adv about the best one) and then gift any remainder at 30 or some age to help with DP/etc.

the rest should be used towards debt and retirement.

and that 4 years should be public, in-state. not private.

[Anonymous]

When you first get it, put it in three separate FDIC insured savings accounts in three separate institutions. That way the cash will be insured up to 250k for each account.

If you have a spouse, keep it only in your name to avoid comingling funds which would make it more likely to make the money a marital asset if you divorce (meaning spouse would get half).

Make sure you (and your spouse) are maxing out your 401ks.

Take some time to breathe and consult a financial advisor etc. You don't have to rush to invest it right away. It is ok to keep it in an interest accruing account or short term CDs as you decide what to do with it.

[Anonymous]

OP you need to worry about your own retirement before you worry about your DC's college fund. You've already put $50K into it, if need be they can get financial aid. Seriously. They are not going to fund your retirement just because you paid for their college. And if you still feel the urge to put some of that money into their college fund, put another $50K in, and invest the rest for your retirement years.

[Anonymous]

1) You don't mention if you're married. If you are, keep it totally separate and don't commingle it (such as by paying off a house that is jointly owned).

2) If not married, pay off your house (or buy a house for cash - again, you didn't provide much detail as to your current situation). Some people will tell you not to, but if you are truly lower middle-class, your goal is to establish basic financial security, not to get rich. Someone who has never dealt with money is much more likely to react badly to market swings and sell low.

3) Beyond that, learn about investing or hire a fee-only advisor to make some recommendations, like a mix of stocks, bonds, etc. Only do something when you fully understand it. Until then, keep the money in a high-yield savings account. You only have to get rich once - don't blow it.

4) Agree you should prioritize your retirement and house over college savings. If you have no house payment, you may even be able to cash flow some college help. If that's not possible, kid can take out loans and maybe live at home with you.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I'm LMC (at least for the DC area). I'm about to inherit around 700K.

My first priority is to stow the money away for DC's college (we've only managed to save about 50K for their college to date). Should I throw it all in a 529? Or should I put it into our retirement fund, and saddle DC with college loans? Or a split between the two?

Or other possibilities? I really know nothing about money because I've never had enough to learn. What do you wise UMC money-having people recommend?

personally I would not ask UMC people because your concerns are not theirs. they have retirement and college paid for.

you need to run the numbers and figure out what is best for your future, and therefore, your children's future. do you have any debt outside of low debt (mortgage, 0% cards, etc?)? how many children do you have? when is your mortgage paid off? how many years until college? are you positive your kid will want to attend college? how much are you willing to put aside- public or private costs? how much retirement funding do you have?

I am of the belief that college savings comes 2nd to retirement and no debt. there is no guarantee my kid will want to go to college, retirement is something we absolutely need and i don't want my kids responsible for me/us because of lack of retirement funds.

your child may get scholarships or other means to pay for schooling. if you really want to set funds aside, then i would set 4 years of tuition aside in a high yield account (talk to a fin adv about the best one) and then gift any remainder at 30 or some age to help with DP/etc.

the rest should be used towards debt and retirement.

+1000

retirement should always come before college fund!

your child won’t need to worry about taking care of you.

[Anonymous]

If you have a very low mortgage rate (ours is 2.25%) don't pay off your mortgage. You'll get more out of the money in a diversified portfolio and still have the tax write off from the mortgage. If your interest rate is very high, it might be worth it, or paying down and refinancing depending on the specifcs.

[Anonymous]

How close is your child to needing funds for university? Right now interest rates in high yield savings accounts are high, and the stock market is low, so you’re probably safer just putting it in a high yield savings account, a CD, or I-bonds (ibonds have annual limits though.)

In general for savings you want diversification. Leave some in cash, some in low risk investments (CDs, bonds) and the rest in an index fund like the s&p500. Look up financial samurai’s asset allocation by age - that should be helpful.

[Anonymous]

Anonymous wrote:Also a LMC person. I would meet with a fee-for-service financial advisor for advice. Personally, I'm prioritizing retirement (which is usually what experts suggest) so I would put the majority in retirement and a bit in the 529. For college, I think I have a solid plan that will get DC through any of our state schools taking only sub/unsub loans but I've been setting expectations (yes there are a million schools but you will be going to one that is low cost or where they give you a ton of money-and it's not easy to get that that money) and talking about options like 2+2 (in my state you can do 2 years at cc and get an automatic admit to our state flagship if you maintain a 3.0 or higher at cc).

How can you put the majority in retirement? There are limits to retirement accounts.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Also a LMC person. I would meet with a fee-for-service financial advisor for advice. Personally, I'm prioritizing retirement (which is usually what experts suggest) so I would put the majority in retirement and a bit in the 529. For college, I think I have a solid plan that will get DC through any of our state schools taking only sub/unsub loans but I've been setting expectations (yes there are a million schools but you will be going to one that is low cost or where they give you a ton of money-and it's not easy to get that that money) and talking about options like 2+2 (in my state you can do 2 years at cc and get an automatic admit to our state flagship if you maintain a 3.0 or higher at cc).

How can you put the majority in retirement? There are limits to retirement accounts.

Earmarked for retirement savings/investments that will support Op in retirement. Don't be pedantic.