Received 50k not sure what to do

[pattyharden]

Salaam,

I am 26 and a year out from graduating med school. By a miracle and some very very smart planning by my parents about 30+ years ago, I will graduate with very little debt. They opened a 529 plan back then which allowed me and my sister to attend college and med school debt free.

Last year, I was in a very very bad car accident by someone who ran 2 red lights. I barely survived, had to have emergency surgery, was in the hospital, recovery was rough, etc. I went through a personal injury lawyer to work with my car insurance, and after several months we reached a settlement where I got 54k after medical expenses and lawyer fees were paid.

I am not sure what the smartest thing I can do with this money is. Purchase a property to rent out? Dump half of it in an ETF? Sell my car and spend half of it on a 2024 GR Corolla and drive off into the sunset? I have been very tempted to do that but I know that’s the 8 year old kid in me that wants to do that.

Thoughts? Also my financial literacy with regards to investing is very poor.

I tried posting on r/personalfinance and tried explaining interest is haram but got absolutely steamrolled if anyone wants to laugh at my post history LOL

 

[g0dschlld]

@pattyharden Bismillah. What to do with the money depends greatly on what your goals are and what the rest of your financial picture looks like.

Are you working? Do you have dependants? Where do you want to be financially in 5, 10, 20, 30 years?

Figuring out the answers to those fundamental questions will better inform what to do next.

Generally, I would advise against spending on depreciating assets like nice cars. Especially since the $54k sounds like it makes up a large chunk of your net worth. But a nice car is halal!

 

[pattyharden]

@g0dschlld Salaam, thank you for the response. I’m in medical school, a year out from graduating. InshAllah I’ll be working a job that pays about 60k for 4 years, and then I really hope to make at least 4-5x that inshAllah.

Single, not married yet. No dependents. Honestly my goals are kind of split.

Goal 1: cause as much of the 54k to grow into something a lot more within 10 years. Maybe even 20 or 30. Use it to buy a house on cash

Goal 2: cause as much of the 54k to grow within 4 years, and purchase a nice car then LOL. InshAllah will plan to use salary to invest then. Yes I know this is kind of stupid but I’m trying to be honest

Goal 3: invest all of into something I can grow in 5-10 years. Or 20 or 30. Have as disposable income to use for other investing purposes at that time in life

Questions: what’s the difference in the route taken to get this money to grow in 5-10 years versus 10-20? Is there a way to get it to improve by even 10% within a couple or a few years? I’m pretty open to suggestions about timeline but my goals are to

 

[annache]

@g0dschlld As someone in med school and probably going into internship (can be very demanding for a while) maybe moving and starting a career - I think your time will be taken up. You wont have much time to manage something like real estate (chasing tenants, managing all the paperwork - maintenance, etc.). I have friends who find it a headache. I would opt for a relatively passive investment like a diversified ETF with a good weighting in stocks.

I agree with the others here perhaps take a few thousand out to enjoy, but dont waste it on a fancy car at this stage in life.

ETF's - there is a dizzying range of them from active , sectoral, passive. Personally I just use diversified passive ETF's like those available from Blackrock and Vanguard that have multicountry equity exposure. They are cheap in fees and give you the best risk tradeoff (dont know what country you are in). If you are looking for halal options the choice is more limited, but SPUS is one Ive heard of. I am rather sceptical of them because their halal-ness is just the opinions of scholars (no way of really confirming), and while I respect your view on interest, I dont accept their assertions that all interest=riba.

 

[coelohim]

@pattyharden Invest it in a Sharia complaint stock fund and forget about it, until you want to buy a house.

 

[spanda10]

@pattyharden Bismillah. First thank Allah for the mercy afforded to you with financial compensation. I hope health wise may you recovery increase.

Don't be in a rush to invest or spend. 6 month emergency fund. maybe a small single purchase of a holiday or something young you would have loved.

leave the vast majority of it. its so easy to burn and lose all that money. if i was you if its not for health [regular physio], charity [increases your rewards] or skills to increase wealth [time spent working on making your primary wages higher and reducing stress so you can do more ebadat] then don't do it. exceptions are umrah/hajj, doing something nice for your parents etc.

its just so easy to burn through money without having anything to show for it.

 

[sbmor777]

@pattyharden First, set aside enough for an emergency fund. This money should be able to cover at least 6 months of expenses if you were to have no income.

Then invest the rest in sharia-compliant ETFs and mutual funds. I see you can put this money away for 10+ years so this would be a good set-it and forget-it strategy.

Edit: I read your post on personal finance out of curiosity and those guys are idiots. Just so you know, dividends from stocks are not interest.

 

[feelinglostagain]

@sbmor777 I second this.

 

[ronnie223]

@pattyharden Aslamalikum boss,

I would first recommend reading a book called the stock market for dummies. I read it personally and it helped me gain some insight into financial literacy. You can also read investopedia on other key terms.

Once there is a foundation, learn about what makes some stocks halal and other harams. Some companies that might seem halal (not invested in Haram etc) can still be Haram due to debt to equity ratio, interest earned. Read this great piece by Zoya, you can also use Mustafa

https://help.zoya.finance/en/articles/4189798-how-do-you-determine-shariah-compliance

Next invest a bit in shariah compliant funds with Wahed Invest or Manzil.

This is how I would spend it:
35k- Halal stocks (up to my choice )and halal index fund (Manzil or Wahed)
2k- Crypto, some are halal please do your own research
5k- Cash emergency fund
5k- Splurge on Umrah and other trips

 

[michael_sf]

@pattyharden

1. Your years as an intern/resident/fellow are, inshaAllah, going to be the lowest earnings you will make. You should max out your ROTH contributions as your tax bracket will be low. If you can get a high-deductible medical insurance plan and max out your HSA, that would be beneficial as well (google triple tax benefit of HSA). Live frugally during these years, you can thank me once you become an attending
2. Take your 50k, pay off ANY debt you may have, and then invest it in shariah-compliant funds and don't even look at it until you are 6 months out from finishing your training. Money, if invested, on average will double every 7 years.
3. Your first job, statistically speaking, will not be your long-term gig. Fight the urge to purchase a "doctor" house immediately. Find a good set up for your job first (multispecialty clinic with some ownership equity vs high-paying salary gig etc) and buy a 2/3 home or townhome in a good area that you can rent out easily to a good tenant once you move into your next home.
4. If you don't have a SAFE and reliable car, get one, buy new(er), pay it off. Repairs and maintenance issues once you're an attending aren't worth your time. You will have plenty of money. you will not have plenty of time. Focus on efficiency and using your money to gain you time and freedom. Buying things is a trap of this dunya. Go rent a fun car and get it out of your system every 6 months. Meeting your heroes (cars), always lets you down in the long term.

I did all these things wrong lol. Please don't make my mistakes.

 

[michael_sf]

One more thing, a really good resource, especially for physicians, is white coat investor . Of course you'll have to fill in the shortcomings when it comes to the Sharia aspect of personal finance, but it is a free and excellent resource that I recommend to all my students and residents

https://www.whitecoatinvestor.com/

 

[daybeliever]

@pattyharden May Allah bless your money and keep you safe from nazr امين

 

[rescued1]

@pattyharden Salaam,

Here is the conventional wisdom in terms of financial order of operation

Establish 6 months emergency fund

Get 401k Match from employer

Max HSA

Max Roth IRA

Return to 401K

529 for kids or Brokerage

If you have high interest debt ( a debit interest % that passes the stock market averages 10 returns, you would prioritize that after 6 months emergency fund)

Not all of the above will be applicable to you, just go through the list and do the ones that apply to you.

I highly recommend that you read the Simple Path to Wealth by JL Collins. One of the best financial literacy books out there.

 

[tito1990]

@rescued1 To my knowledge, there is no shariah compliant 529. But agree with the rest.

 

[dosto]

@pattyharden Help me pay off my 3k debt

 

[spunkydoodle]

@pattyharden Send parents to hajj

 

[rosiejack]

@pattyharden IMO, it depends

Do you have reliable transportation (I.e a car)?

Do you have money for moving related expenses (first month’s rent, deposit, household items) that you will need when you graduate? Assuming you will rent yourself.

Do you have an emergency fund?

If yes to all these, I think you should put your money into halal ETF and forget about it. It’s best to not fall into a lifestyle creep when you start to make more money. Don’t chase material items for the sake of it. Put your money towards appreciating assets and try to get a mortgage as soon as you can so you can start building wealth. Cars, eating out, nice clothes, will all be short-term, you have to think about preserving your hard earned money.

May Allah make it easy for you.

 

[osuchrissyosu]

@pattyharden Put it as down payment on a house! Rent out a property!!