I’m about to receive about $200,000.00 and I’m not sure what the best thing to do with it is

[josh0302]

Hi, my mom passed away and I’m going to come into some money. I don’t trust myself with the money and want to put it away somewhere so in 15-20 years or so I can retire. I’d appreciate everyone’s thoughts.

I am 45 y.o. btw, I make about $70,000.00 a year practicing law. I have no retirement at all atm.

Thanks for the advice.

 

[thentell]

@josh0302 Set aside a six month emergency fund ($10-25k) in a high yield savings account.

Pay off any debts.

Open a Roth IRA at Schwab/Fidelity/Vanguard and max that out each year (currently $6k per year). Invest in their S&P 500 index fund.

Max out a 401k (currently $19,500 per year). You’ll need to see which funds are offered and compare their expense ratios.

Treat yourself to something nice (new toy, vacation, etc). [Edit: around $5k due to the size of the windfall and the significance of losing a parent]

Put the rest in a taxable brokerage account. Since you currently don’t have any retirement and your timeline is 20 years, I would recommend going 100% in a S&P 500 index fund. In 10-15 years, start rebalance your portfolio by switching to more bonds and/or dividend funds (like SCHD).

 

[josh0302]

@thentell Thank you sir!

 

[frans]

@josh0302 Upvoted him, he gave you best advice ngl

 

[stander_pty]

@thentell Literally just do what this post says. And you’re all set.

 

[wharley]

@thentell

Treat yourself to something nice (new toy, vacation, etc).

But OP is 45 with no retirement savings.

I would invest it all, as tax advantaged as possible, and then begin to save a large chunk of income, like a third. You need to make up for lost time.

 

[josh0302]

@wharley I bought 1/2 of a 1985 Catalina 30 ($4500). That was my treat. What are your thoughts on where to invest? Do you manage your own or go with index funds? How do you feel about someone buying a house and renting it?

 

[chris1957]

@josh0302 Which half?

 

[josh0302]

@chris1957 I haven’t laughed in a long time. Thank you.

 

[amaian]

@josh0302 Hopefully the Thursday, Friday, Saturday, Sunday morning half.

 

[thentell]

@josh0302 I suggest a S&P 500 Index fund because it has a historically good risk-reward ratio.

You could make more getting into the landlord business but there’s a lot more risk… and a ton more work. Also, your location matters a lot when looking into RE. Is your local/state government more tenant- or landlord-friendly? Who would be your target tenant? How old is the property? Do you have any RE experience?

 

[mesta831]

@wharley I mean, it depends on how much OP spends on the toy. OP can afford to spend $500-$1000 on an iPad or a small vacation or something without jeopardizing his future, as long as it’s good for him psychologically and he doesn’t go overboard. But agreed, he can’t go out and buy a Tesla or a sports car or something.

 

[tadake]

@thentell Thank you. @thentell

 

[b1inchrist]

@thentell Oh, and don't spend that "Emergency Fund" on anything except a true emergency (such as losing your job.). Save up for the "things" you want out of your income, not the inheritance.

 

[yonniejoy]

@thentell When I hear people say high yield savings accounts are you talking about a money market fund?

 

[yonniejoy]

@thentell When I hear people say high yield savings accounts are you talking about a money market fund?

 

[yonniejoy]

@thentell When I hear people say high yield savings accounts are you talking about a money market fund?

 

[mikeintrouble]

@thentell I agree with what everybody above said.

As an accountant who sees this all the time I strongly urge you consult your tax advisor as to how the funds are coming to you, and will there be any tax effects.

My friend decided to yolo his funds received from the death of a relative (about 60k) and took all the money out with out considering the taxes. This money combined with his salary of 60k put him in tax trouble, and needed to empty his savings to pay the bill.

 

[gregory_r_g]

@thentell Wasn't 401k an american thing? I didn't see them specifying their location.

Edit. Nevermind, it's dollars, so USA

 

[twinmama]

@thentell This is the way.