Managing inheritance money

[cliffusngmg1]

Okay, a bit of a back story, I'm 28 male earning 4.5k. Recently I got inheritance from the passing of my mom (F cancer). The amount is surprising as my family has always been very normal therefore I never expected this amount as I always thought maximum my mom would have is 100k. Also, I'm the only child and my dad is living off 3k monthly pension transferred to his name from the passing of my mom.

What I got:
1. 10k in emergency funds
2. 275k in FD
3. 380k in Unit trust (Pays about 1.5k a month in dividends which I am not sure whether to let it roll or use it as my daily expense)
4. 180k in ASM/ASB (I'm not bumi so the other version)
5. 300g+ in gold necklaces,rings, bracelets (Yeah I actually weighted it cause my dad insist in keeping it at home and I want to force him to put in a safe instead)
6. House in my name (600k+ Value)
7. There are other investments not in the will so the lawyer is still checking with the department of I'm not sure what.

I recently purchased a house around 400k zero deposit and monthly payment is 1.6k shared with my gf. I have a car which is 300 a month commitment other than that nothing else. Therefore my question is for a guy with access to all these funds, might not be a lot to some, what would be the best way to manage is?

 

[blurredcontours]

@cliffusngmg1 OP should be glad there is no inheritance tax in Malaysia. Anyways...

You should keep that money rolling. Do not use it as a daily expense if your salary can already cover your current lifestyle. Be careful of lifestyle creep and blowing that money.

Go for something low-risk but with decent returns. The unit trust and ASB looks fine, but might want to do something else with the FD money. A financial planner would be able to recommend you more specific options.

For the house, it would be better if you could rent it out for extra "passive" income. If your father currently stays there, then it will be more complicated, and you'd probably want to have a discussion with him on what to do. Downsizing is an option if he is staying there solo, but be cognizant of the sentimental value.

Also make sure you keep control of this money. Do not give in to peer pressure from your GF and father as to how to spend the money. If you choose to pay off the house loan early (not necessarily recommending this, check with your financial advisor), make sure you are only paying your portion, or buy her out completely.

 

[cliffusngmg1]

@blurredcontours Understood on the money rolling, will try to do that as I was thinking of using the money coming in to pay my house loan since it's basically covers everything. And for my own salary I do put in other funds about RM600 monthly into Public Mutual funds.

My dad and I are staying in different states, so yes he's alone in the house and yes sentimental issues so selling is out of the question but he planning to let his brothers move in instead of being alone. As for my own recently purchased house, it's under my name my gf is just sharing the payment with me.

Thanks for the advice

 

[blurredcontours]

@cliffusngmg1 On your uncles moving in, again good to get understanding that this is a temporary convenience. For example, if your father passed away, you'd need to manage how to tell your uncles to move out.

On your girlfriend sharing the installment with you, she must have a lot of trust in you.

 

[cliffusngmg1]

@blurredcontours Yup I thought about this too, how to manage them out eventually. We'll see how it goes, for now best is having someone home with my dad in case anything happens.

 

[karmel]

@cliffusngmg1 Tell no one

 

[oyinbopepper]

@cliffusngmg1 Bro pay for consultation with fees only financial advisor.

 

[quantumcreation]

@cliffusngmg1 Given the economic situation we're in now, I wouldn't be too rash in making any significant moves with where the money is at now.

Aside from getting yourself proper counsel from estate lawyers and a financial consultant I think you need to spend some time to do some serious thinking about what you're going with the money.

If you don't plan on having kids, this is a sum of money that can really change your life's trajectory. Start with figuring out how much your dad will need to live on for the remainder of his life being well taken care of financially. With a 3k pension, and assuming he has reasonable health insurance, I think a supplementary 2k per month (24k per annum) would afford him decent quality of life and overseas travel 1-2 times a year.

Optimistically, if we're getting out of the global recession in 2-3 years, and you get a full reset on how your money is being invested, 24k with a 4% SWR (how much money you're withdrawing passively without drawing down your principal) would be 600k, which still leaves you close to 1 mil if not more, even after accounting for selling the 600k house in better market conditions and downsize to a smaller house for your dad while freeing up more liquidity + some cash buffers for prospective bear years.

1 mil isn’t enough for you to retire on right now, but it does afford you plenty options on what kind of life you want to live. You’re still young enough to go back to school if you don’t like what you do for a living now, maybe get an overseas education in a high demand STEM field and possibly start a new life with a new career in a different country. You can give small business a try (BE CONSERVATIVE). If you like your life now and are not looking for any significant change then this money would afford you decent financial security. While keeping your job, you can invest the money in a well-diversified portfolio that generates reasonable returns, and you might be looking at retirement right around your 40s. You can take some time off work and explore other ventures as you’ll be able to take a pay cut.

Point is, you have options.

It’s tragic that your mother passed away while you’re still so young, but her passing gifted you the chance to do what most of us can only dream of, which is to live life to its fullest potential, not necessarily in terms of how much money you can make, but how much meaning and satisfaction you can get to have with the options that are now afforded to you. As with most parents, I believe the ultimate thing that your mother wanted for you is happiness and to live life as intently as you can. You should really spend some time in deliberate contemplation, travel and read if you must to learn more about the possibilities there are out there for you. Then with maximal conservation and due diligence, make the best available decision you can.

 

[cliffusngmg1]

@quantumcreation Thank you for the wonderful write up. Very insightful indeed. Yes I do love my current job right now, wonderful colleagues and boss and am planning to continue the typical climbing up the corporate ladder route but will definitely read up on various things to learn more.

 

[davidnando2]

@cliffusngmg1 Get financial consultant. They knew better

 

[christheseeker]

@cliffusngmg1 Buy bugatti

 

[blurredcontours]

@christheseeker That may only get him half way there.

 

[lnavi]

@blurredcontours Okay, Half a Bugatti then.

 

[karmel]

@lnavi This is the way

 

[nick_y]

@cliffusngmg1 The only thing that I think you should do is change the FD to something else that earns better rate.

I am sorry for your loss. Take care of your father.

 

[thetwister]

@cliffusngmg1 Sorry to hear of your mom's passing.

Regardless of which direction you decide to go with your assets and investments, I'd simply recommend that you live life the same way you did before.

Stay under the radar, safeguard your privacy, live within your (previous/original) means, and look forward to an earlier/more comfortable retirement.

 

[dragonfyre]

@cliffusngmg1 Sorry about your mom's passing.

While I have no idea about your priorities in life,. I can, of course, think about how I would proceed if I was put in your place.

I would think about being clear headed and not making rash or financially unsound decisions. For this, I would consult people who are knowledgeable about money matters, whether professionals or laymen, within your circle or otherwise. Certainly reading about personal finance and investments through books/other sources will expand your bandwith.

Being a father of two kids and having managed family finances for several decades and suffering knocks and nerve wracking drawdowns these would be my main considerations.

1). Compartmentalising the money into future use categories as below.

2). Emergency Fund. Say RM 100k or more for medical or other emergencies such as job disruptions. Certainly this should be in a liquid vehicle.

3). Family Needs Fund. Say start with RM 100k and make monthly or periodic contributions. The quanta of these would be dependent on your plans for starting a family and what could be your/your dependents' plans and aspirations, education related or not. Investment risk involved should be moderate/manageable and time for exit taken into consideration.

4). Retirement Fund. Say start with RM 300k to RM 500k and make monthly contributions. I would further divide this into cash/near cash holding (say 20 percent) and long term investments (say 80 percent).

5). Joy Fund. This would come after the above basics have been covered. Say start with RM 100k if possible and make periodic contributions. This fund will take care of luxuries such as travels, charity，personal development and whatever fun things you can burn money on. Judiciously of course.

6). Each of the above funds should be in separate accounts for convenience in tracking and to fine tune them if necessary.

This approach is needed so as not to make counter productive financial decisions, for mental clarity and sense of purpose. Your mileage may vary on these things though but being decisive and steadfast in achieving your goals will make all the difference. There is no substitute for delayed gratification coupled with discipline.

The most valuable asset you have is your time and if you don't squander it you would be ahead of most people.

Good luck and best wishes for a fruitful life.

 

[cliffusngmg1]

@dragonfyre Thank you so much for the advice. Will definitely think about it.

 

[mikeysavedbygrace]

@cliffusngmg1 Omg

 

[mikeysavedbygrace]

@cliffusngmg1 May I ask what are the name of the unit trust funds from where you are getting the dividends. You can disclose publicly or privately.