Inheritance and finance

[Baltimore0924]

I'm 25 years old and will soon be inheriting nearly half a million dollars. I have zero debt from undergrad and law school. My car is paid off thanks to family and so is my girlfriends. When I graduate law school in 2 years I think we will be in pretty good shape due to not having any hindering debt. Is there anyway I can turn my 500k into a million within about 20 years? Will probably have kids by about 30 and I'd like to finance their education. Any advice would be great. Thanks!

[riverwed070707]

Easily. Even with a relatively low ROI. I'd suggest picking up a few investing books. Will you invest the entire amount or do you have plans to use some of it? Where is the money currently sitting? If invested, maybe consider letting it stay where it is. Not a bad idea to consult with a trusted financial adviser.

[Baltimore0924]

My family is taking care of this while I finish up law school. But from one I've been told, it's with first republic securities company. They've set up a portfolio and it's been divided into equities, mutual funds, and cash money funds, and bank deposits.

[snafu]

You need to know exactly what First Republic Securities hold for you, What are the names of the equities, Mutual Funds, Bonds, Bond Funds and cash. What is the fee paid to each MF, Bond Fund and what percentage they charge for purchase and sale price of each transaction. What percentage of value in each group, whether American or International and what countries. You need to know how First Republic Securities are paid, do they get paid 2% or more of the value of holdings each year?

I suggest you complete one of the Risk Tolerance questionnaires to establish your comfort zone.
http://www.bankrate.com/financing/in...isk-tolerance/ is one of many available on-line. Your Risk Tolerance will change over time.

In your shoes, I'd likely go to a 'paid for service' Investment Advisor to review current holding and create a comprehensive plan for you. If the person tries to sell you anything, s/he is a salesman, not a counsellor, grab your papers and leave, it's a scam. If they say Vanguard is a low cost Mutual Fund provider whose most successful funds are yadda, yadda, yadda...he is transmitting information. This is too important to ignore or to leave to relatives or friends working in finance. You might look at posting by jIM_Ohio

[autoxer]

I'm 25 years old and will soon be inheriting nearly half a million dollars. I have zero debt from undergrad and law school. My car is paid off thanks to family and so is my girlfriends. When I graduate law school in 2 years I think we will be in pretty good shape due to not having any hindering debt. Is there anyway I can turn my 500k into a million within about 20 years? Will probably have kids by about 30 and I'd like to finance their education. Any advice would be great. Thanks!

With a law degree and 20 years, you could start with zero and save up a million.

[MakeAStash]

Search "Rule of 72" to learn how much time is needed to double an investment's value.

[Baltimore0924]

I'm not sure how I plan on using any of it just yet. It all depends on my job situation after graduating law school. Hopefully I'll have a steady income and will use some of my first year salary to save up for a down payment on a home. I'm not sure how much I should put down on a house yet because I'm still in school.

[scfr]

There may be things you'd like to do with the funds that haven't even crossed your mind your mind yet. For example, once you finish law school and have been working for a few years, you may decided that you would like to open your own firm.

Vanguard offers an extra level of service at the $500K+ level; it's called Voyager Select Services. If you're interested, you can read about it here: https://investor.vanguard.com/what-w...elect-services I'm sure there are other companies that offer similar services. I mention Vanguard because I happen to be a fan, as are many other members of this forum.

I recommend that the first thing that you do is sit down with the family members who set up the current accounts and ask why they made the choices they made. If they are knowledgeable about personal finance & investing, and their reasoning is sound, you may decide not to make any changes.

[Baltimore0924]

Thanks for the information. Realistically, what can I expect on my returns with this amount of money in about 30 years if I use a good financial investor and conservatively investment this money?

[scfr]

It is very realistic to expect to hit your goal of $1M in 20 years. On my very conservative investments at Vanguard, my personal rate of return over 10 years has been 5.9%.

A compound interest calculator would tell you that $500K at 5.9% compounded quarterly would equal $1.6M+ after 20 years BUT don't forget that you may have to pay taxes on your earnings! Study up on the tax implications of any investment you are considering. And if you use an adviser, you will pay their fees as well. Fees and taxes will eat away at your earnings.

[snafu]

Gen Xers were taught that a major percentage jobs that existed when we graduated would not exist for our DKs. What will be important in 2045? You are young and can tolerate swings in the market so I wouldn't go 100% conservative. I'd expect a CFP to suggest an International percentage and something futuristic/health/technological as well as a successful Bond or Bankers Fund. You would be expected to review your circumstances and the economy annually with serious adjustments at least every 5 years as you pass through various life changes.

With the requirement for expensive mortgage insurance, hidden or not, 20% DP is an important standard along with no more than 2.5 annual income top price or payments that would exceed 28% of monthly income.

[ronb]

Vanguard offers an extra level of service at the $500K+ level; it's called Voyager Select Services.

+1 for Vanguard. I'm not yet a Voyager Select but they've always treated me right.