$100,000 - What to do?

[creditcardfree]

Great plan! No one should be without an emergency fund.

The maximum for a Roth IRA is now $5000 and will be the same in 2011. You have until April 15th, 2011 to fund the Roth for 2010. You should consider funding it for both tax years since you have the money now, in other words, $10K.

[Ima saver]

I think it is a great plan too!

[MonkeyMama]

Originally Posted by Bonedry

In terms of ROTH for 2011 - I thought that the max used to be $4000/year... Is it still this way? Also, do I still have until April to fund the previous year?

The ROTH limit is $5k per year (2010/2011) and yes, you have until April 15th to fund the prior year.

ETA: I didn't see ccfree's post - she covered it!

[krantcents]

[quote=Bonedry;278343]I have just inherited $100,000 tax-free from a relative who passed away. What should I do with it?


Personal Financial Situation:

I am 33 years old, and make $65,000/year at a 'high' security job. I do not forsee any major pay-raises (except periodic ones for inflation), and I plan to work until I am in my 60s.

I max my 401k every year (currently $16,500 yearly) and the balance in my 401k account is currently $100,000.

I receive a tax-free gift of $5000 every year.

I receive $3500 every year in my tax-return.

I bought a house 5 years ago for $199,000 @ 6.5% (30-year fixed, $40,000 down - no PMI) and currently have a principal balance of $139,000.

I have a second mortgage (home equity line of credit) debt of $19,500 @ 5.75%.

I own 2 vehicles that are paid off and have low mileage.

I have no credit card debt.

I have a ZERO balance in my savings account, and my checking account balance is nearly dry at the end of each month.

I have a ZERO balance in my traditional Ameritrade (Stock/Bond) account.

I have a ZERO balance in my Ameritrade (ROTH/IRA) account.


I am a firm believer that saving as much as possible NOW is the key to a lavish, if not comfortable retirement, and I want to get the house paid off ASAP so that I won't be throwing my money away paying interest for 25 more years. This last year, I have been putting extra money into the principle of the house each month (about $400 each month). After the house is free and clear, I plan to invest the bulk of my future paychecks in the Stock Market/Bond Market.

That being said... what should I do? Pay the house down, pay off the second mortgage, invest the full amount, other ideas?[/QUOTE

I would invest the $100k in mutual funds and dollar cost average into the market. I would probably look at a variety of asset allocations. Review you choice quarterly and annually. I would also look at refinancing your mortgage and HELOC before rates go up any further.