Who is great at investing money?

MKCP5

DIS Veteran
Joined
Apr 20, 2005
So I have recently come into a small (but not too small) inheritance. I have no idea what to do with the money. I have put it in our savings account for now, but I know it's earning almost nothing there. DH and I are in our mid 50's with plans to retire about 65. I think at that point we'd like to use the money towards a small place somewhere warm. We have no debt but our house and one car payment. We have a very good pension from his job when he retires. I personally have none after being at home as a mom and then working for myself. We don't need the $ to live on, but I would like to be able to access the $$ I think in case something huge comes up we cannot forsee. We have a rainy day stash for small emergencies (car repair, appliance breakdowns etc) We have always been careful with our money but never had a large sum to invest. I don't know where to begin or what to do with it. Thoughts? Thanks guys :)
 
10 year horizon with a desire to access some if needed.......

Here is my general suggestion based on the data you provided. Use it as a baseline to compare to other suggestions.
1. Take 10-15 percent of it and get a CD
2. Put the other 85-90 percent in a low cost diversified mutual fund. Vanguard has many to chose from. One example of a plain vanilla approach would be to use the STAR fund.

I've kept it simple. I hope it helps.
 
If you want to keep it safe I'd do a CD ladder- A CD ladder is a strategy in which an investor divides the amount of money to be invested into equal amounts in certificates of deposit (CDs) with different maturity dates.

I also keep some emergency money in a Roth IRA that is invested in a savings account at Captial One 360 https://www.capitalone.com/bank/savings-accounts/ira/

Quick summary: If you are under 50, you may contribute up to $5,500 in 2017 and 2018. If you are 50 or over, you may contribute $6,500. The amount you can contribute is based on income limits, however.

They even have Roth IRA CD's and they are FDIC insured. The reason I like these types of savings vehicles is they are safe for my emergency $$, also I can withdraw my contributions penalty and tax free. I'm not a big fan of keeping my money in a savings account, then having to add the interest to my income to pay taxes on it!

Side note for all you parents of little kids, start stashing your money away in these IRA's because it is not counted against you as an asset when it comes time for your kids to go to college and do the FAFSA!!

And not that you asked but I'll throw my 2 cents in anyway, make sure when your DH goes to collect his pension he signs up for spousal benefits since you have no pension of your own. To many people I know; the DH signed up to get 100% of his pension now. When he died his spouse was left to live on a paltry SS check.
 
^You can't generalize. My DH's SS will be 50% larger than his pension. It also depends on other investments.

We keep funds we might want in a short-term bond fund
 


Hire someone that you trust. If you don’t know anyone, Dave Ramsey runs a list of trusted money advisors. Interview several and go with who makes you feel the best.

Our advisor takes 1% of our account each year. The more money he makes us, the bigger his commission is. If too many clients lose money, he looses money. Good incentive for him to perform.

He also advises us on how and when to take pensions, social security, IRA withdrawals, etc. He provides a great service to us.
 
Go to Vanguard and take a look. They have good planning tools. IMHO, if you have good pension, have some savings, no debt, small emergency fund, you probably can take a small portion of the money and put it in an index fund and let that grow over time. You probably don't need to be overly conservative and the entire amount in a CD.
 
I don't mean to be Debbie Downer, but that $ should be placed in an account in your name only. Inheritances are not community property unless you co-mingle it. My inheritance from my mother is in a personal account of min, not joint. We are also mid-50's and have been married 30+ years, but I am of the "better safe than sorry" camp. I had a SIL who co-mingled the inheritance from my MIL. Her husband (not DH) gambled it away and she had no recourse because she put it in a joint account.
 


So I have recently come into a small (but not too small) inheritance. I have no idea what to do with the money. I have put it in our savings account for now, but I know it's earning almost nothing there. DH and I are in our mid 50's with plans to retire about 65. I think at that point we'd like to use the money towards a small place somewhere warm. We have no debt but our house and one car payment. We have a very good pension from his job when he retires. I personally have none after being at home as a mom and then working for myself. We don't need the $ to live on, but I would like to be able to access the $$ I think in case something huge comes up we cannot forsee. We have a rainy day stash for small emergencies (car repair, appliance breakdowns etc) We have always been careful with our money but never had a large sum to invest. I don't know where to begin or what to do with it. Thoughts? Thanks guys :)

I would definitely pay off my mortgage and car note, then I would put the rest into a cd until I decide what to do with the money (Feds should be raising rates today).

The Bogleheads.org website has a lot of financial information on it.

Depositaccounts.com has CD rates from all banks and credit unions.
 
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I would max out your IRA contributions each year if you aren't doing that already, and max out your HSA contributions if you have that option.
 
You mentioned a pension for your Husband.....how safe is this pension throughout your entire retirement period? There are many pensions, even good ones, that will be in poor shape down the road due to over promising benefits and under estimating contributions. Even those not in the private sector are not immune just looking at places like IL and CA. IMO, I would not feel 100% confident in any pension promises and there are many good stories documenting this.

For your situation, the Vanguard Star fund is an easy, one stop fund. I have a 16 year old son who is contributing to this fund. Vanguard in general is going to be a good place to go. It is easy to do and they have good help available. If you are going to hire someone, make sure they are a fiduciary on your behalf all the time and are a registered investment advisor (RIA). As others have said, max out a ROTH IRA with this money each year.

Good luck
 
I think that asking for financial advice from people you do not know is asking for trouble. Pick a large financial instution, Chase, Citibank, Fidelity or whoever is local to where you live. Ask them for advice on what to do. Get more than one opinion. Before you go make some decisions yourself on what you want to accomplish with the new funds. You will never know who is giving you advice here unless it is about Disney, and even then I would take it with a grain of salt. I am a CPA and would not give you advice without looking at your total financial picture.

I would talk to a financial advisor from Fidelity, Vangard, etc. before seeking advice from someone who works at Chase, Citibank, Wells-Fargo, etc.
 
So I have recently come into a small (but not too small) inheritance. I have no idea what to do with the money. I have put it in our savings account for now, but I know it's earning almost nothing there. DH and I are in our mid 50's with plans to retire about 65. I think at that point we'd like to use the money towards a small place somewhere warm. We have no debt but our house and one car payment. We have a very good pension from his job when he retires. I personally have none after being at home as a mom and then working for myself. We don't need the $ to live on, but I would like to be able to access the $$ I think in case something huge comes up we cannot forsee. We have a rainy day stash for small emergencies (car repair, appliance breakdowns etc) We have always been careful with our money but never had a large sum to invest. I don't know where to begin or what to do with it. Thoughts? Thanks guys :)
You should always know what you are investing in! Nobody takes care of your money like you do!
 
Make sure you check into a retirement account for yourself if you don’t already have one. There are options for stay at home moms to have retirement accounts, google them up to get familiar and then talk to your financial advisor. My 2 cents...
$0.01: don’t be afraid to shop around for a financial advisor you are comfortable with
$0.02: drop them if they don’t work out. We all make mistakes, if your financial advisor turns out to be one take your money & MOVE ON.
 
If you want to be safe and just save the money... Look at short term CD's at online banks there are a good number paying 2.5% or a little more for 12-18 month CD's longer terms are at a lower rate.... If you want to invest it then look for a trusted advisor or do a lot of research but make sure you understand all ups and downs of doing this as there is always risk involved.. anything low risk that a financial advisor will lead you towards well let's say 9 out of 10 times you will make out better with a CD from online banks when you consider the fees and loads. I am personally not from the camp of using an advisor... I have gotten to know enough through the years being my relationships with banks for my company and they truly have never given me an advice that I did not already know... But that is me... The old saying is still true with the stock market buy low sell high... you just need who can tell what is low now and will be high when you want to sell... But there are also stocks that will provide income if you are not concerned about the ups and downs and there is where an advisor can help if that is what you are looking for.
 
Pay off the house and car.

Then invest your house and car payment monthly amounts in an index fund at Vanguard.

How would you feel if you put the inheritance into an index fund and the value dropped 30% in 2019? My guess is you’d panic and not want to lose more and pull it all out.

Take the guaranteed return by paying off all your debt. Then invest your house payment. If that investment drops you’ll feel much better because you’ll be debt-free with no money worries.
 
I would always pay off debt first.

Then start reading. Bogleheads forums is a good place to ask questions. There are a lot of very knowledgeable posters there. Also go to Vanguard website to find more information on how to invest.
 

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