General Question

elguapo02145's avatar

I just got 1/2 million dollars from a close relative. What should I do with the $? Should I invested in a company of should buy a house?

Asked by elguapo02145 (87points) June 15th, 2008 from iPhone

what to do with $?

Observing members: 0 Composing members: 0

28 Answers

Mtl_zack's avatar

some people say that a house is the best investment a person can make. personally, i would keep living as i am, and use some of the money for traveling. i would give 7–10% to charity, and use the rest to support m parents. so 10% charity, 30% parents, 40% house and 20% me would be my breakdown.

jlm11f's avatar

Nobody can tell you what to do with the money. Use what you need it for, and save the rest for your family, by either investing in in it fairly safe methods such as mutual funds etc. It is imperative you don’t go crazy with the money. Be smart and remain a saver, you’ll be happier in the long run.

babygalll's avatar

Wow that is awesome! Don’t blow it all in one place! hahaha

I would buy a house, payoff credit card, travel and give some to charity.

skfinkel's avatar

You don’t need to invest the whole amount in a house to buy a house. You have enough for a comfortable down payment so the monthly amount will be affordable. (I assume you have a job now, and are paying something for rent—that would now go into your mortgage payment.). With the rest, I would think seriously about diversifying the investment—so if one doesn’t do well, you still have more. You could look at some stocks of companies you like—but if you do this yourself, you need to know how to look at those balance sheets. You could invest in broadly funds or stocks of various kinds. Also, of course, giving to whatever charities you like as Zack suggested. And I don’t know if your parents need financial assistance or not.. But this is enough money if you invest well, could make your retirement years easier. For mucho safety, you could invest in long term treasury bonds with some of it—that would come due in ten or more years. If you are new to investing, probably the best advise, aside from divesitfyig, would be to consult a smart and trusted advisor who could guide you..

jrpowell's avatar

It is really impossible to give you a good answer with the information we have. Do you have kids? If you do how old are they? How much do you have in the bank? Where do you live? What is your annual income? Do you already own a home?

I don’t want you to answer those questions. I just want you to realize that there are a lot of factors that should be taken into account when you make this decision.

My advice is to hire a good accountant.

marinelife's avatar

I am available for adoption. :)

russellsouza's avatar

I would first hire an accountant / tax person. You will probably want to find a way to avoid paying taxes on the money…unless that is already figured out through a trust or something.

I would defer at least 100K into retirement. That will have a huge payoff down the road.

gailcalled's avatar

Another important factor is whether this is your entire inheritance, or whether there will be more money arriving in the future, other than your pay check.

PupnTaco's avatar

Get a referral for a good financial advisor.

nayeight's avatar

You should just give it to me, I’ll take care of it!

reed's avatar

I would buy a house, its a great time to buy real estate with all the foreclosures. What you could do is buy a $300k house and put $200k in a high interest account and use the interest to cover your property taxes, maintenance, utility bills, etc. and essentially have free housing for the rest of your life.

emt333's avatar

buy a house. prices are low and a home is the foundation of personal wealth. defer the rest to a retirement fund.

AstroChuck's avatar

I have a bridge on the east coast available for sale. Also I have this land in the bayou I might consider parting with. All are good sound investments.

xyzzy's avatar

It’s an awful time to buy a house. The market has NOT bottomed out yet. Give it a couple of years.

In the short term, I’d recommend one of the following to park your money. These aren’t meant to earn much money; their mostly just a very safe place to store money (safer than a bank since you’re over FDIC limits) until you figure out what to do.

http://www.treasurydirect.gov
https://personal.vanguard.com/us/funds/snapshot?FundId=0050&FundIntExt=INT

The second one I believe invests 100% in treasuries and is more liquid than purchasing treasuries outright.

Long term it’s up to you, but I’d point out that right now is a lousy time to invest if you are not extremely knowledgeable. Volatile bear markets are difficult to play in.

Finally, keep in mind that $500k is not a lot of money. You are not RICH, you just have a comfortable nest egg. It’s very tempting to start spending as if you are rich, and that money will disappear faster than you think.

jstringham21's avatar

Pay off your mortgage, get your kids through college(?), invest in some stocks, travel, buy yourself a nice car, have a little fun, and bank the rest.

Melonking's avatar

Aarg don’t give any of it away, save it for when you are old and then you can go mad if you want and no one can say anything aboult it.

gailcalled's avatar

@melonking makes a good point. And we all forgot to ask about the taxes you might have to pay. Are you going to take it in a lump sum? Do you live in the US? Uncle Sam wants you/ or yours.

elguapo02145's avatar

ok I live in Boston n I’m 27 years old I got 0 debt!! And yes I’m getting a lil bit over 500k for sure!!! I dont owned anything just my 08 nissan..

gailcalled's avatar

It doesn’t matter what you own or don’t. This is a real windfall for you but you may get hit with a whopping bill from the IRS since this is unearned income.

Remember Richard Hatch on the first Survivor? He won $1 million, forgot to pay his taxes
and ended up in prison, never mind all our absent-minded corporate CEOS. Pay for an hour with a good accountant.

If you live in MA, the Vanguard Ma Tax-Free bond fund is another safe and liquid (you can write checks) place to park money. It earns about 3.7% as of now. https://personal.vanguard.com/us/funds/snapshot?FundId=0168&FundIntExt=INT

Count your blessings, but learn the differences between State Inheritance and Estate taxes and ditto for the Feds. Ignorance is not bliss.

richardhenry's avatar

You have half a million dollars and you’re asking Fluther, not a financial advisor? In addition, more information about your circumstances would be helpful.

Upward's avatar

Use some of the money to go somewhere you always wanted to go. (Budget $3000—$10000) Find a finacial adviser to help manage the rest. Don’t tell everyone you have 1/2 million! Many of them will want to borrow from you any time they need money.

gailcalled's avatar

@elguapo; I forgot to ask; where do you live? What are your working hours? Do you have a burglar alarm?

spendy's avatar

@gailcalled, let me know if you need a sidekick (you crack me up)

But seriously…just be smart. Invest wisely and think long term. You’re young enough to have a little fun, do some travelling, etc. Just make sure you don’t go wild. You’ll kick yourself later. I did (still am).

craziprincess's avatar

Pick me! Pick me! Just kidding!

Well first of all….CONGRATS!!!
I guess it depends on where you live and how the real estate market is. Starting a business is great, but is very risky. Most small businesses end up not doing so good. So be smart about it, do a lot of research and don’t rush into anything. Whatever you do, don’t go crazy and start buying a bunch of stuff, cuz then you’ll just end up with nothing but stuff you’re gonna throw out in a few months.

ordosingularis's avatar

That’s enough money to buy into a decent hedge fund.

gailcalled's avatar

Buyer beware. Isn’t decent hedge fund now an oxymoron?

berocky1's avatar

easy. Give a but

berocky1's avatar

Sorry. Give some to charity buy something nice for you. And save the rest after paying off debts.

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