Self doubt and inheritance

[hoorayforjc]

Details on financial situation below. Spouse and I (32 & 33 years) got a couple kids young kids. Recently received an inheritance of $180k which I put in to a savings account. Additionally my spouse has about $140k sitting in an account that is being managed by some group, don't have any more details on that in regard to fees they charge but I know they charge something.. feeling like we should consolidate this and invest on our own. Frankly, came from a pretty low income household and all this money is overwhelming me. Even grasping what I make is absurd to me.

Income:
A: $130k, 15% bonus
B: $100K

Bank:
Checking: $50K
Savings: $180k

Investments:
A: Fidelity 401K $102K, 13% + 3% match
B: Fidelity 401K $104K, 6% +3% match
C: Managed: $144k.. not sure of fees
D: Schwab: $5k.. just been fun money to date
E: 529: $12k, +2600/yr

Loans:
Home: $526k, 3.5%
Car: $14,849 4.9%

We pay off our CCs in full each month and actually just paid off another auto loan in full from our checking. Main question is the money sitting in the savings.

1. Should any of this go in to an HYSA? Or just leave in this chase savings?
2. For the investment side is there a preference between Schwab where I have my brokerage set up today or setting up a new brokerage through fidelity? What about JP M aligned with my banking?
3. If I use Schwab it seems the S&P index is SWPPX, is this the right choice? Also, 100% in here feels a little intense, if I did 75% and split to something else what would that be? Or other splits?
4. Assume just reinvest capital gains and dividends?

I'm sure I'm missing important information but will add as questions come up if needed! Thank you!

 

[saintdc]

@hoorayforjc Why not call the firm you already have a relationship with and see if he can provide some fee based advice?

 

[hoorayforjc]

@saintdc Certainly can do that, was posting here first on if there was any recommendations since it's on my mind tonight. There isn't really a relationship with the existing firm, been no contact in several years.

 

[saintdc]

@hoorayforjc You probably should have met with them before you commingled it. Max your retirement accounts, hsas, fsas, and then brokerage

 

[kallis000]

@hoorayforjc You sound very shocked by your success and if I read into it, your surprise is that someone coming from where you came can earn what you earn.

I bet the car debt is listed because you want to be rid of it. Maybe you want to hold on to the cash instead. Still, that car APR is good money after bad money and cutting off that soend might feel good.

Now is the time to remember repeatability, you've got a long horizon. Kids cars, sports, camp, unexpected kids, income fluctuations are almost certain.

What can you do to help the kids become who they were meant to be? Educational trips? Internships?

Disability insurance outside of your employer. You might want it to be a disability policy per se or you might want it to be a life insurance policy which can also give you critical illness coverage, its up to you but you are in a generation that moves from one job to another and so portability is key. The health insurance premium for your family outside of an employer would be over $1500 per month, keep that money liquid. Deductibles, out of pocket maximums, youve already had a few of these I'm sure but over the next 20 years keep this liquid as well.

Those cash accounts (checking and saving) are valuable, they represent a 1 year fund for Illness, job interruption, home repairs, etc.

Anything with less than a 1 year horizon is good in a HYSA. But that's small stakes. Its hard to find justification for having all finances consolidated with one institution. In fact with FDIC there's reasons to have it at different institutions. You CAN put anything with over a 1 year horizon into a taxable account however you might experience a 30% loss. The 7% S&P returns are not guaranteed to double your money in 15 years. You expressed concern about being in it so heavily, what are some potential return ranges you would anticipate in 20 years? Let your research into that guide you.

You express no frustration with work and I salute you, are you getting the social interaction, challenge, novelty, and opportunity to make the world better for yourself and your family and those close to you at a level that satisfies you? I hope so.

I see you doing a lot in tax deferred, this will put you in very high income brackets in your later years. Yes, 15% to 25% are commonly listed percentages to invest, youve researched, but, you might look into something that lets you grow your money post tax, this can help with social security. Contributing above the employer match should be strategic, that money will be taxed when you pull it out. You're right on the line for Roth. Vanguard has funds that focus on the non-dividend paying companies from the s&p, you might find that it is tax favored for you.

Have you looked into a 3 or 4 fund portfolio adding bonds, international, REIT? Target date funds? If you are wanting access to tax favored money before turning 59 are you interested in a life insurance retirement plan? Its very different from your current configuration however you asked for different choices.

When they money is coming in in surprising amounts, and you've earned it, well done, perhaps think through ways to handle to upcoming good times and challenges. If you want to wait a while, until it feels real, that can provide some peace of mind.

 

[nessa1234]

@hoorayforjc Why the self doubt? You are doing better than the majority of Americans your age. You can do better still, but no reason for self-flagellation over your present circumstances. First step, use those savings to pay off the car loan. You could put it in a MMrkt mutual fund that earns slightly more than the interest on the car loan, but that income would be taxable. After tax (which is what matters), you are better off wiping out the car loan.

Second, you do not state what the interest rate is on your home loan. You need to check your 1040 to see if you are getting any tax shield from the mortgage interest paid. If you are filing using your standard deduction you are getting zero tax benefit from paying mortgage interest. In which case you may be better off using the rest of the savings to pay down your mortgage. Depends on the mortgage rate.

Lastly, check the statements you get from your wife's advisor. They should be monthly, but could be as infrequently as quarterly. Time to start paying attention to them. If you shoot that advisor in the head, Schwab would appear to be the logical place to land the funds. Fidelity is as good, but personally I like to keep the accounts and account statements to a minimum. Good luck!

 

[joannemaree]

@hoorayforjc I wouldn’t suggest using JPM for your investments. Been there done that and it was a huge mistake. Also, JPM only pays .01% on a savings account. At a minimum, I would setup a HYSA somewhere else.