So, I'll be 50 in March and I barely just bought my first $20 in stocks a few weeks ago on an app. I think my stocks already doubled which got me really excited (I know, I know). Plus, I'm tired of being broke and I'd like to start being more adult with my finances. My credit sucks and is sittin' ugly at ~590. I just learned that I'll be getting around $30k from an estate inheritance in a week or so. It'll be the most money I've ever had access to at one time, in my life and I don't want to blow the opportunity to do something financially sound with it. The money is being deposited into an Individual Inherited Traditional IRA account that I was told to set up a few months ago "just in case" there was any money left. I need to buy a decent/reliable vehicle ~$5-7k and then I'd like to try to be a first-time home-buyer here in New Mexico. What do you recommend I do in this situation? Thanks in advance for any advice!
I'm in New Mexico and am HORRIBLE with money. I'm about to get some ($) and need advice.
byu/Noah_Fear inFrugal
Posted by Noah_Fear
22 Comments
Don’t touch it. You’re bad with money. Make it difficult for you to access it.
You already are trying to spend it.
If you have any debt, pay that off first. If you have more than one debt, start with the debt with the highest interest rate.
https://www.reddit.com/r/personalfinance/wiki/windfall
https://www.reddit.com/r/personalfinance/wiki/commontopics
Take the money put it in VOO and don’t touch it till you’re ready to retire.
If your stocks have doubled in two weeks, you’re taking too much risk.
Learn about low cost, broad market index funds ($VOO, $VTI). That is where your investments should be.
you can’t do anything. it rolls into an IRA, then just treat it as you don’t have it.
there are hefty penalty to take early withdrawals.
I’m a former Financial Advisor. Invest it in something staying ahead of the inflation rate then forget about it. You may be tempted to buy things to improve your situation or make your life easier; don’t purchase anything with this $30k. My credit is now in the 400s and I have $17 left every month after paying my bills. If $30k dropped in my lap, I would invest it, forget about it, and continue to drive DoorDash on top of my full time job.
Get a fiduciary to advise you.
A. Don’t touch it , put in an IRA and forget it. B. read A
Go to r/Bogleheads. They can tell you how to invest easily. It’s called VT and chill. Now is the time to open up a Roth and standard IRA. 15 years of returns will be much better than having nothing at all in the future. You can still live paycheck to paycheck, just don’t touch that money. Then you can start forcing yourself to be frugal. One step at a time.
You will be 50 soon and have zero savings and retirement. That is your answer. Do not touch the money; invested in a Roth IRA and leave it alone.
Keep the money in the IRA. Invest it into a s&p 500 index fund with whatever brokerage you chose (vanguard is VOO) for example. Leave it there until you retire. It’s your older self’s money, Not your current self.
Get a fiduciary, they will help you invest and can help you w a budget.
Move out of this country with that money and you’ll be in a better place in any other country.
Start by reading the basic tips on the wiki over at r/personalfinance. You need to set up your emergency fund in a high yield savings account, pay off debt, and put some towards retirement. As for stocks use the set it and forget it diversified index funds. Look up boglehead.
Think of it as an emergency fund only and don’t touch it. Put it into your retirement IRA or at least a interest making cd and forget about it
Do you have debt?
If it’s going into an IRA, you take a heavy penalty to touch any of it prior to age 59 1/2.
Once it’s in, just invest it in a low cost index fund.
Add to it if possible.
You need to make sure you understand the rules on your inherited IRA. Unless it was spousal, you have to empty it in 10 years in any pattern you wish. And if the person you inherited it from was at the age where they were required to take RMDs (required minimum distributions), then you are required to do that each year as well. Besides that, invest your money in index funds (mentioned by others as well), and don’t mess with individual stocks like it sounds you did with your Robin Hood app. Stick with Fidelity or Vanguard.
You Need A Budget.
Seriously. YNAB is a budgeting software. Its mandatory IMO.
The biggest thing is to slow everything down and give yourself some structure before you start moving money around. A reliable car and an emergency fund are usually the boring but solid first steps, especially if you have never had a cushion before. Be careful with the inherited IRA since there are rules around withdrawals and taxes that can bite people later if they rush. I would also treat the home buying idea as a longer term goal and use this money to stabilize things first, not force a purchase. Excitement is normal here, but protecting the money matters more than growing it fast right now.
Just an aside note…. $5-7000 is unlikely to get you a reliable car these days. Used car prices are currently inflated and that’s just not much money any more. If yo’re bad with money, getting a car that will be needing expensive repairs is not a good investment. When something is cheap…. consider why.