Well, about a month ago my grandfather passed away. It was sad, but not unexpected. He was 90 years old, and has had dementia for the past six or seven years of his life. He got pnumonia around Thanksgiving, and died from it a couple weeks later. Anyways, the though of an inheritance of some sort never even crossed my mind.
My parents called me last night to inform me that my mother and my uncle had divided up a large amount of money that my grandfather had invested in a CD or something like that. They decided to split that money equally between all five grandchildren. I’m the youngest, at 20, so there wasn’t any issue of what to give younger children. Each grandchild received, as you can guess, $7000.
I have never had near that amount of money in my life. The closest to that I’ve had is around $2000 from summer jobs. Now I need to figure out what to do with it all. ~$1000 I have already found a use for. I owe some money here and there, have a speeding ticket and towing fee to pay, and so forth. The other $6000 is up in the air. My parents suggested putting some in a mutual fund, or CD. I don’t really know anything about that stuff, so I am lost. I figure I will put $2000 into my checking account to use for general purpose money. Another $2000 could be used to start up a savings account that I can keep adding to over the next year and a half to help pay off some student loans. The other $2000 I figure can be used for that CD, or mutual fund, or something.
Any other suggestions are welcome, as I don’t want to do something bad and lose this money, or not make the most of it.
You can put up to $3000 in this year, and you pay no tax on the interest it earns. The downside is the money won’t really be accessible to you, but putting at least something in when you’re young nets you so much more money in the longrun.
ASD has got it!!! You could have, with a little luck, around $40,000 in the account when you retire. And there is no tax on it when you withdraw it. Hell of a deal.
Buy a $ 1,000 suit, a nice pair of Johnston Murphy shoes, a polo dress shirt, an Omega Seamaster watch, an alligator belt and a designer tie, then find a nice young lady and go out dancing at the club.
The rest I would stick it in a 6 month or 1 year CD (certificate of deposit) That way you can research what you want to do with it and not be antsy to do something that you may regret later.
Then during the investigation time, thoroughly look into IRA’s, Roth IRA’s, stocks, and mutual funds. I find Suze Orman to be a nice, understandable level headed approach to Money Matters. YMMV.
You are very wise to ask advice, not alot of people your age would hesitate to blow this money. If you do things right, and invest in yourself regularly ( weekly or monthly) you will be on your way to financial security that very few ever reach before 60.
I am very happy for your windfall and please accept my condolences about your grandfather. It was very nice of your parents and aunts and uncles to divide the money up like that. Through your grandfather’s hardwork and saving it is a chance for you to get a better start out in life.
Honor him and your family’s faith in you by not blowing it.
Yeah, ASD had a pretty good answer. But then, what to do with the remaining $4000? Hmmm… all the marshmallow fluff you can eat? Dried apricots as far as the eye can see?
You could send some to me?
I don’t believe I was the first person to put that.
I would like to know what the financial types thing of this idea; my father suggested it to me when I received an unexpected windfall and it turned out to my advantage in the long run:
Regular EE savings bonds.
The chances of the government going bust are slim to none and, more importantly, you can get the cash if you need it (unlike an IRA or CD, which assess penalties for early withdrawal).
My mom would second the IRA idea; my brother and I will soon be getting a good chunk of cash from our dad’s estate (we had to wait until he was eighteen for some legal reason) and that’s one of the things I’m going to do. Before that, though, I’m paying off my credit cards. And if at all possible, my car.
I third the IRA idea. But I also want to add: take $100 and spend it on fun stuff.
$3000 - IRA (just go to your bank and tell a personal banking officer that you want to set up an IRA)
$1000 - misc. you’ve already earmarked
$2000 - checking
$900 - any debt you’ve accumulated
$100 - a night on the town/books/CDs/whatever you’d have fun with
Invest the rest in a Roth IRA. At your age, you will come out ahead in the deal.
However, if you decide to blow the money because it’s a windfall, we’ll make you feel guilty about it until the day you die. Are you ready for another 60 years of guilt trips from the SDMB?
Slight hijack to say that I LOVE the idea of the SDMB still being here in 60 years!
I agree with previous posters with the advice to apy off debts, and then place it somewhere with a decent interest rate. I know nothing about banking, but I still say put it aside, let it grow if it can, and save it for something really worthwhile, like downpaiment on a house, or for retirement, or whatever.
I’d compromise – pay the debts, and put half of what’s left into an interest-paying account for whenever you need it, but for heaven’s sake use the rest to do something interesting. $3,000 = plane tickets and a month and a half in Europe, maybe longer if you do your own cooking and have a few friends to stay with.
Well, a lot of suggestions have revolved around paying off my debts. While good in theory, I already have well over $7000 in student loans. And if I can’t pay off all of it, I’m not going to pay off just some. Silly theory, I know, but if I use some of it for that then why not all of it? Basically, it puts me down a road of not having any money left over to anything else with.
My dad also suggesated an IRA. That tax free thing does sound kinda good. (speaking of taxes…am I going to have to claim this $7000 on my income tax? Or does it get taxed in some other way, or at all?)
And if you start paying on student loans before you graduate, don’t you have to continue, even if they were deferred loans? Since student loans are usually low interest and many don’t accumulate interest until after you graduate, I wouldn’t start on those until you have a “real” job.
Pay off/down any high interest loans, like car or credit cards, but I still think you’d be better off investing in an IRA. Actually, you can still invest $3000 for 2002 (until April 15) and then turn around and invest $3000 for 2003.
That’s what we did when we graduated and started our IRAs: put $2K in the first of the year for the previous year and then as soon as we had the money again, we put another $2K in for the current year.
And I also agree with Fretful Porpentine that experience is an investment, too. Don’t forget to have some fun with the money.
[sub]This is the first time I realized that was Porpentine and not Porcupine.[/sub]
That’s funny, I’m $200 poorer than I was yesterday. See, my wallet, which had my waitiressing money in it fell out of my purse. And less anyone thing I’m the type to haphazardly throw money around, well…I’m po’.
I guess there’s a ying and a yang everywhere…one Doper comes into money, one loses it.
If I were you, I’d keep it around for emergency money. One never knows when one is not going to be able to make rent due to a lost wallet.
I’m with Fretful on this one: use some of the money responsibly, but don’t forget to have a good time too.
Pay off the high-interest debts (anything above 10%), save/invest half of what’s left, but take $2-3K to do something genuinely fun that you might not otherwise have a chance to do for a long time. Check out cheap airfares and hostels, and go to Europe or Hawaii or South America for a month (or however long you can stretch the money for).
And Swiddles, sorry about your lost wallet. That really is a bummer.
One thing I haven’t seen mentioned is that you should buy a decent memento, so that in 20 and 40 and 60 years, you’ll look at it and remember your grandfather
