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

[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?

I would totally spend it on hookers and blow

[Anonymous]

OP please ignore any financial advice and instead read the Boglehead article on what to do with a windfall.

[Anonymous]

I would listen to those saying put most of it into a fund for college/retirement.
But, but, also assess some real needs right now. Do you live in a sub-optimal housing situation? Does your vehicle (if you have one) need lots of maintenance? Don't go buy a porsche, but also life is short and maybe devote a quarter of the proceeds to making your life materially better right now. If that's a 100k down payment on a much improved house for you and your family, and a new vehicle that reliably gets you to work, do it. But the principle stands: don't go on a spending spree because you'll blow through this and have nothing to show for it.

[Anonymous]

Anonymous wrote:What's lmc mean?

I would guess “lower middle class”.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Agree with PP. We need a few more details to help (like your age, income, debt, kids, ages). But generally to make this money last your whole life:

-Pay off all debt more than 4% (other than maybe a mortgage)
-Max out retirement accounts from now until retirement
-Establish an emergency fund in a high yield savings account for 6 months of expenses.
-Put 4k in 529 per year for college (max for DC tax deduction) and set aside $4k for next
-Put 10K in ibonds this year and set aside for next
-Maybe put an amount you never want to gamble in high yielding CDs.
-Set aside $10K for vacations (5K this year and next)!
-Put the rest in brokerage in Vanguard (but may go down)

OP

I am in your shoes and am also expecting an inheritance.

Look into Vanguard. I just called them yesterday. They have the lowest fees and best performance of investment funds in the industry.

Pay off high credit card debt.

How is the condition of your car? I'd also pay off your car.

Does this mean a Vanguard index fund? Thank you.

[Anonymous]

What are your current debts and assets, what is your household income, and what are your major expenses?

I promise to give only good and kind advice based on this information, if you share it. I'm delighted for your good fortune!

[Anonymous]

I would:

1) pay off debt
2) pay off house
3) fund college accounts
4) go on vacation
5) put remainder in a retirement account

[Anonymous]

Anonymous wrote:Troll. No one calls themselves "a poor" - that's a pejorative that some rich people condescendingly use.

And the fact that they qualified lmc for the dc area means they probably make 250k per year.

[Anonymous]

We're also LMC, with kids in college. Here's what I would do.

1. Talk to financial advisor. I imagine the advice will be:
2. Pay off any debt with more than 4% interest rate.
3. Spend money on getting a reliable car and on essential home repairs, if needed.
4. Sock away the vast majority of it for retirement in something like that Vanguard fund.
5. Put some into a 529 for kids. And be honest with your kids from an early age that you can only afford instate college. The only way they can go OOS/private is if they get scholarships that bring the cost down to the instate level.

Congrats!

[Anonymous]

Please don’t get advice from DCUM. You can’t provide enough information here for anyone to get a big picture understanding of your financial situation or have a legitimate assessment of your values to get valid recommendations. I would recommend that you find a fee-only (not fee-based - that’s different and not as neutral) financial advisor and spend the 5-10k necessary to get good advice. Search the XY planning network, or the Garrett Planning Network to find advisors with experience with people similarly situated as you are. Interview maybe 3 to find someone with experience with people in your situation and look to make sure they actually are listening to you and your concerns. Ask them for samples of how they present their recommendations and consider whether their deliverables make sense to you. Ask whether they help implementing their recommendations if you don’t feel confident doing it on your own.

Also, please spend another 2-4K on estate planning as well. The financial advisor you reach out to may have recommendations for an attorney to work with.

[Anonymous]

OP - calling yourself "poor" is an insult to those who are actually poor.

[Anonymous]

Anonymous wrote:I would:

1) pay off debt
2) pay off house
3) fund college accounts
4) go on vacation
5) put remainder in a retirement account

FFS - retirement comes before college! If debt has high interest rates, by all means, tackle that, but putting a vacation ahead of retirement savings?! Good lord. I’m not saying don’t go on a vacation, but if the OP is behind on retirement, as it sounds like is the case, that has to be a high priority. You can’t borrow for retirement.

[Anonymous]

Don’t do anything with it and whatever you do don’t give it to a financial advisor to invest until you’ve educated yourself. YOU are the only person who can make the right decision for you, based on your own goals and no one else’s. You need to take the time you need to determine your goals and from that what to do with the money.

Get on Bogelheads and understand the basics of a low cost, balanced do-it-yourself portfolio. Understand that most studies show that that will make you more money over the long term than any advisor or amazing stock or fancy investment plan.

Jean Chatzky’s Her Money podcast is also a reliable source of information.

One thing you’ll need to understand sooner is whether there are tax consequences related to the inheritance. Not necessarily that you would need to pay taxes, but if the funds are in retirement accounts there are pros and cons to rolling them over to your accounts.

If you’re just getting cash then a short term solution is to buy some short term CDs via an account at Fidelity, Vanguard m or similar.