My father recently passed and he left me with 150k in life insurance. I have no kids, split a mortgage with my gf and make around 70-75k. I don’t have a 401k but looking to start putting money in that and I have around 120k in a high yield savings. What advice would yall have for a 25 year old. Car is paid off and I tend to live below my means.
What to do next to with my money.
byu/Rare-Cardiologist919 inpersonalfinance
Posted by Rare-Cardiologist919
10 Comments
Sorry for your loss – I’ve lost a parent and it sucks.
Split mortgage with gf? Buddy, that’s a bad idea. Fix that before anything else.
Edit: aside from that, I would say you’re doing pretty well. I would definitely start investing in 401k, Roth, and general investment account.
Start here: https://www.reddit.com/r/personalfinance/wiki/commontopics.
Max your IRA, max your 401K. That requires $30,500 each year. 401K has to be from your paycheck though, so you can use your savings (from the life insurance) to offset maxing it.
Just out of curiosity, why do you have $120k in cash and no 401(k)? That seems like problem number two, after the mortgage.
First, take your time! A money market account with Fidelity or Schwab is paying 4% with no risk.
First off, so sorry for your loss. That can’t be easy for you.
Maxing the 401k and IRA are good ideas. Just remember, they both need to be funded with earned income, only. And if your employer has a company match for the 401k, even better. Also, if you have access to a HSA with your employer, max that out too. That’s the only triple tax advantaged account. And sometimes employers will contribute to that too. If I had 120k in cash, I’d probably purchase an investment property with 20% down. I like multifamily, long term rentals. I have a duplex that cashflows nicely and helps me reduce my tax burden. Short term rentals could be a good idea too, depending on the market. If you did decide to buy an investment property, make sure it’s only in your name. No mortgage until marriage my man.
I think you should park it in a hysa for 6-12 months. Make some careful decisions about what you want to do with the money and go from there. Savings, education, pay off debt, etc. I would avoid paying off the mortgage simply because I wouldn’t want to co-mingle my inheritance with a non spouse.
Sorry for your loss. Put that money in a high yield savings account.
I agree with maximizing your retirement investments. I would put away as much as I could when you are young. As you get older, you will likely have more responsibilities and it will be harder to save. Compound interest is your greatest ally. As an example, you could save $5,000 for 10 years and stop, and you would have the same amount of money if you started at 35 and saved $5,000 for 30 years. I’m not suggesting to stop, but it gives you an idea at how important starting early is.
“The most powerful force in the Universe is compound interest.”
– Albert Einstein
Keep the money in your name only. It’s yours. You should be the only one deciding how to invest it. Start watching Cramer (Mad Money) on tv. Diversify greatly . Think about food and paper products people buy and buy the stock companies that own those brands. Own it don’t sell it , they will make you more money. Put some stocks in an IRA. Keep a certain amount in savings , even though you live frugally (as you say you live below your means) you still need money in case of emergencies.