Friend's inheritance...

[tripods68]

Understandable, although that kind of allocation may make one kick themself themself 20 years from now when the Dow is at 25,000. At 26, one's IRAs and 401k's aren't going to have much in them. Even if they've been maxed out for 4-5 years, that's still well less than 5% in equities.

Then again, a less-conservative allocation may make one kick themself 20 years from now when the Dow is still under 10,000.

I would submit that something like a 50/50 income/equities would be ideal for obtaining both objectives and truly being diversified. Even this is still pretty conservative for someone in their 20s.

I am a risk-averse investor by nature when it comes to large sum. A 50 percent or $500K equity investment allocation is high risk. There are lesson to be learn in today's market. With CD laddering maturing over time you have plenty of options what to do with it. But with the kind of risk you are referring and how the market has behaved for the last year or so, I still don't have that much confidence yet.

[ScrimpAndSave]

Update:

My friend is going to buy a new $40,000 luxury car...and I guess that is fine because she has the money right? She has a really nice car that is around a year old...it is probably worth around $25,000. She asked what I thought and I just said, "I would keep your car and your usual rhythm of spending. Pay off all your debts and make sure you max our your Roth IRA every year. Then find a trusted advisor to invest the rest so you can retire early."

She doesn't have a Roth or anything...I wouldn't have given her my two cents...but she asked. I hope she makes the right decision.

[disneysteve]

Update:

My friend is going to buy a new $40,000 luxury car...and I guess that is fine because she has the money right? She has a really nice car that is around a year old...it is probably worth around $25,000.

I'm afraid this bodes poorly for the likelihood that she will handle this money well if that's how her mind works. I hope I'm wrong but if the first thing she wants to do is blow 40K to replace a perfectly good year-old car, I'd say her priorities are out of whack. Maybe she'll make this her splurge and be responsible with the rest. One can only hope.

If she asked my opinion, I'd use an online calculator to show her how much that 40K could be worth at age 65 if she invested it instead of spending it now.

[shultice24]

Update:

My friend is going to buy a new $40,000 luxury car...

D'oh!

[ActYourWage]

Update:

My friend is going to buy a new $40,000 luxury car...and I guess that is fine because she has the money right? She has a really nice car that is around a year old...it is probably worth around $25,000. She asked what I thought and I just said, "I would keep your car and your usual rhythm of spending. Pay off all your debts and make sure you max our your Roth IRA every year. Then find a trusted advisor to invest the rest so you can retire early."

She doesn't have a Roth or anything...I wouldn't have given her my two cents...but she asked. I hope she makes the right decision.

If she was responsible with money, I wouldn't see this as a bad thing since she does have 1 million in cash, however, seeing how she doesn't have a Roth or any other type of retirement, I would advise strongly against buying this car...

[tripods68]

I have no problem buying a luxury car if spending 'spree' will provide a stress relief after a funeral. What I am concern the most is how she handles the rest of the million dollar she inherited.

[snafu]

While your friend may appear to be asking for advice, she is really asking you to approve of her decision. She likely thought you would suggest some exotic purchase to help relieve/mask her sadness for the loss of her father. I expect her to eventually tell you her dad would want her to enjoy the special things money will buy.

It would be interesting to see if she attempts to conserve the remaining $60. K or so... since she doesn't have a 'savings/investment' mentality. Hmmm, wonder if she's surprised at what is offered on her existing vehicle. She has not yet instigated a retirement plan from earnings but she did buy a car last year.

[tripods68]

I have been there , and at first you buy this or that ----- but you are truly are trying to do is to find out what the heck is this all about ? I mean life as a whole , and how brief it is --- you are numb , nothing makes sense any more , and you not longer have tears to shed for nobody , you are alone , and scared but you pretend otherwise ==== conversations without meaning , you listen to words like " they are in a better world " or " they are looking after you from heaven " and you want to explode ==== for you know that death is not good . and you wouldn't want your parents to "look" at your pain if they could , because you would not want them to suffer more === you question GOD , then you feel guilty for doing that , it is whirlwind of emotions , and then you realize that day will come for you as well , and wonder if all of this means anything ===and just as you think that pain cannot longer be bearable , and you have gone as far as you can go ==== peace comes to you in a very strange way , that peace that comes after a storm , just like that in such weird way === then you become strong , as you have never been , and now you really know that life is good , and that some day death will be not more , you see the smile of a child , and you smile too ==== there is hope , for there is love . so go trough what you have to go trough , you are healing , and learning === you will be all right , I know I been there before .

You hypnotized me with your words. Excellent