brokerage accounts (for a real dummy)

[Anonymous]

So I turn of "age of attainment" later in the month. I actually had totally forgotten about this because my mother died years ago--and believe me I'd rather have her any day of the week. But her trustee just emailed me and asked me if I had a brokerage account so she could deposit the funds on my birthday. I get interest from a different trust and it all goes into what used to be an ING Orange but is now a Capital One 360 and I asked the trustee why the funds shouldn't go there? She said it could, but it wouldn't be insured and that it was a "rather large sum," so she was recommending a brokerage.

I have no idea what I'd plan to do with the money, so I don't want it in stocks (plus I personally think the market is going to tank over the course of 2016). Bonds are returning a lousy rate, often less than the Capital One 360 saving rate. What is a brokerage account if not for stocks? And how do I decide what is a reasonable investment strategy anyway, since I'm not very clear what my plans are?

[Anonymous]

I'm sorry OP. Those are always hard milestones.

A brokerage account isn't insured either. You could move the money there for now, but then I'd move it into CDs or at least a bank account earning around 1%. I think it's insured $250,000 per person. So, you might have to use different banks. I don't trust this market either.

[Anonymous]

I like the boggle head website although they would encourage investing. You should get some additional info, including a full accounting. You need to know the amount to know if you need more than one account.

[Anonymous]

The money is probably currently invested in the stock market. So the simplest thing is for it to be transferred as it is to a brokerage without making any changes. You need to find out how much money it is and what form it is coming in. If it's an inherited IRA for example, you absolutely want to keep it as it is rather than liquidating it. Don't sell anything until you nderstand what you are doing and what the consequences are.

[Anonymous]

Well, you need to figure out what your financial goals are and how this fits into it.

How are you retirement savings? If this is a big sum, you could now max out your retirement savings and pay yourself from the sum each year. Think of it as slowly moving the money over into tax advantaged accounts.

Things like that. You also want to start reading about investments on the bogleheads wiki, to understand different implications of stocks, bonds, etc.. Note there's a section on there about how to manage windfalls.

[Anonymous]

Anonymous wrote:I'm sorry OP. Those are always hard milestones.

A brokerage account isn't insured either. You could move the money there for now, but then I'd move it into CDs or at least a bank account earning around 1%. I think it's insured $250,000 per person. So, you might have to use different banks. I don't trust this market either.

Not true. Brokers are all members of SIPC, which is FDIC for brokers. Each account holder is insured for 500,000. FDIC only provides 250,000. SIPC insures against fraud and mismanagement by the broker, but not against loss of value of securities. Furthermore, broker can't lend out 10 for every 1 you deposit, the way banks can. I suspect the 250,000 in a money market fund at a broker is safer than 250,000 in a savings account at one of the major banks.

Open one or more brokerage accounts, OP, and have the trustee transfer the assets.