50K share inheritance. What to do?

**MonkeyMama** · 05-23-2013, 05:17 AM

I'd probably just put the $50k in cash, for now. This is pretty standard advice when you receive unexpected money - don't do anything *rash.* Just put it somewhere safe and take some time to figure it out.

Given your age and investing inexperience, I'd say it is not wise to leave the money as is. I am assuming it is in individual stocks. If it is invested in mutual funds, then maybe it is okay as is.

Are you going to need any of this money for college? Living expenses during college? Anything like that? A car? A graduate degree? A home? If you have no immediate need for the money in 5+ years, then it is wise to keep invested. Put it somewhere simple and low cost. Vanguard is known for its low cost fund. Something like a "Target Retirement" fund (does not have to be for retirement) will give you an appropriate mix of stocks and bonds for your age. Since it's a total windfall, you might feel comfortable just putting it into the "Total Stock Market Index." Which is about 100% stocks, but you would not have to worry about all the ins and outs of stock investing. A balanced fund is often more 50/50 or 60/40 with stocks and bonds, so that would be more appropriate if you were more risk adverse.

Make one of these simple moves to start and then take some time to learn more about investing.

**Esozh** · 05-23-2013, 05:33 AM

The absolute best thing you can do with that money is to pretend you never got it. You want to find a low fee investment company that you are comfortable with and invest it in mutual funds, and forget about it for 40 years. If you do this, and then do a Roth conversion for the maximum amount ($5,500) for the next 9 years, when you withdraw the money in retirement it will be tax free.

If you assume a standard 8% long term annualized rate of return, that $50,000 will be just shy of $1,600,000 when you reach age 65. That's not necessarily going to be enough to retire on in 40 years, but it's a great place to start.

Don't buy a car with it. Don't use it to pay off your student loans or as a downpayment on a house. I really wouldn't suggest getting involved in a business with your sister - family and money shouldn't mix. If I was you, I'd invest it, and forget about it.

If it makes any difference, I'm 26 years old, and received an inheritance last spring larger than yours, and it went straight to Vanguard and has never been touched. The stock market has never had a period where it lost money over 30 years. Yes, there will be down years. But the truth of the matter is that let's say you go use it as a downpayment on a house - 30-40 years from now, that house is going to be outdated and need repairs, and probably going to cost you as much in upkeep and taxes as what you end up profiting from it, if you profit, over that long of a period of time.

Bottom line - is anything worth essentially giving up $1.6 Million for?

**MonkeyMama** · 05-23-2013, 05:55 AM

Just to clarify - most 20yos are terrible investors and have a lot of pressing financial needs. I respectfully disagree with the last comment, but did want to clarify why I did offer the advice I did. I also offered my advice having been in similar shoes. Using that kind of cash to help with housing, vehicle and college expenses has meant a very low-stress adulthood; able to weather many financial storms. (My spouse has been retired since age 25, for example. A little money can go a long way). This only worked in conjunction with a commitment to stay out of debt and a high savings rate. I have watched way too many young people blow through $50k type windfalls in about five seconds. I think it's fair enough to be extremely careful with this money and to mostly pretend it's not there. But don't pretend it's not there while racking up high interest debt - that is just silly.

$1.6 million is nice, but doubtful most 20yos have the commitment and know-how for this. The natural inclination is to panic and sell low.

**Esozh** · 05-23-2013, 10:11 AM

My point of view is that while, yes, $50K would be very helpful when it comes to college, or buying a house, etc., - I think the lessons learned from having to do on your own are far more valuable than just spending money you didn't have to earn.

Someone who has the discpline and respect for money that comes from learning these lessons will have the maturity to put that money in an investment account and forget about it.

I do understand that life happens and it's nice to not have to live paycheck to paycheck, and that it's a fantastic feeling to be debt free and owe no one. I just think I'd be willing to have some short term debt, if that meant I could also reap the rewards of that kind of compound interest.

To me, there comes a deep desire to excell and a profound respect for money when one has gone without their whole life. When I was 20, I was making $50,000 a year, had just gotten married, bought my first house, and had money in the bank, with no debt aside from the mortgage. I understand that is not the norm - and I also understand how easy it is to lose everything, because I did lose everything and am rebuilding now.

To me, learning those lessons are worth more than the $50K, but I also think having that $50K sitting in an investment account would be the best idea. Monkeymama and I disagree, but it's not out of discord, more different perspectives and different life situations.

It's not wrong to use it for a house downpayment or something like that - but make sure you have a positive net gain. Don't go buy a brand new car, or take vacation, or blow it on crap.

**Manthony** · 05-24-2013, 05:59 AM

What form are these shares in? Are they direct shares in the form of a DRIP? Were they inherited to you by a will or power of attorney within a brokerage account? Depending on where these shares actually are, its prolly better to just keep them there IF they are still making money.

Were these shares cashed out and you have the $50k in cash? If that's the case, Id put it aside in an interest bearing account,also something you can do with a DRIP that pays more interest than a bank or CD, and use the money to start a business. Since you're in marketing, you can get involved in starting your own online marketing company for example for $5000 or less.

**shaggy** · 05-24-2013, 01:23 PM

I would convert it to a low-cost index fund like the Vanguard Total US Stock Market index, and just leave it there forever.

Whatever you do, don't hire someone to invest it for you. Don't pay anyone to manage it for you. Just do something simple with it, and don't spend it.

**scfr** · 05-26-2013, 12:15 PM

Sorry to hear about your grandfather.

Without knowing more about your "big financial picture" it is hard to offer advice.

However, I do suggest factoring your late grandfather in to the equation. Was he a person you would consider financially savvy? If so, did he leave any notes about why he purchased those particular shares? (Or can your grandmother or parents offer any insight?) If your grandfather was a Warren Buffet type, there may be compelling reasons to just hold on to the shares. But on the other hand, if your grandfather was not someone who knew much about finance and bought the shares because a fellow lodge member gave him a "hot tip," then selling may be the way to go.

Also please take in to consideration what you think your grandfather, who cared enough about you to remember you in his will, would want you to do with the inheritance. If he wanted your inheritance to go towards your education, then it would be completely fitting to sell the shares to help pay for school.

Be sure to take note now of the value of the shares on the day you inherited them, especially if you don`t plan to sell for awhile. Not sure what country you live in, but you may owe taxes on any gains after the date of inheritance when the shares are sold.

50K share inheritance. What to do?