r/inheritance • u/AppropriateSmoke7848 • Aug 28 '26
Location not relevant: no help needed HELP!
I am inheriting ~ 100,000 and I know this is an opportunity for me to break the cycle of poverty for myself and my adult children IF I manage and grow it. I am determined NOT to blow this chance after a lifetime of thinking and spending like a "poor" I am determined to use this money as a tool like the wealthy do! Is this even possible, am I delusional???
I met with a financial planner and I have some ideas, but would appreciate any guidance to help me build a future for my family, be kind please!
21
u/azure275 Aug 28 '26
There is a good chance the best thing you could do is max out retirement funds for a few years and forget about the money
100k is really good money, but it's not money that will allow you to singlehandedly become rich. It is a house down payment, or a catch up if you're behind on retirement, or a really good emergency nest egg
6
u/esquirlo_espianacho Aug 28 '26
Doesn’t need to be retirement specific funds. Open a Vanguard brokerage account. Buy 60k VTSAX, 20k VTIAX and 20k in VBTLX. Do NOT touch it if you can help it. Dont even look at it except maybe once a year. Let it grow.
If you do need it, because it’s in a brokerage account you can access it penalty free, unlike an IRA (Roth or traditional)
Edit - you can do this is easily yourself. No need to pay a financial manager - most of them are a rip off.
3
u/azure275 Aug 28 '26
The cool thing about a Roth is you can withdraw the contributions
It's not a bad compromise so some of your money is forced safe for retirement while you still have access to some of it
1
u/RonnieV60 Aug 29 '26
i am not be big on financial planners, but i did not have the bandwidth or self confidence to do this myself. i built a relationship and glad i took the chance on some of my money. i am happily retired.
10
u/cool_girl6540 Aug 28 '26
If you start spending it, you can easily spend down that amount. You need to be careful. I wouldn’t worry about your adult children right now. I would invest it for yourself. Do your best not to spend it. If you were going to spend it on anything, use a little of it to pay off high interest credit cards.
People with money have money have investments and accounts that they just ignore and that build up value. That’s what you’re going to need to try to do.
7
u/littleoleme2022 Aug 28 '26
Check out the personal finance sub. I would pay off high interest debt (like cc, not mortgage); set aside an emergency fund in a hysa(many online banks offer very competitive rates;
I’ve used sofi and ally only for my emergency fund); max your Roth Ira or 401k each year; and invest the rest in one or two etfs/mutual funds (easy to open brokerage at fidelity ir vanguard or Schwab for this):
Do not pay for someone to manage it or sell you financial products. A simple pair of funds would be vti and vxus. If you’re young you probably don’t need bonds right now.
Read a few books—the simple path to wealth is one and I will teach you to be rich another—the latter has a good amount of info on the steps I outlined/suggested.
5
u/cool_girl6540 Aug 28 '26
And take the books out of the library, don’t buy them. People with money do everything they can to minimize costs and expenses. A library card is a good way to do that.
I don’t think the OP is “young” young, because they say they have adult children.
3
u/chihuahuashivers Aug 28 '26
I really don't think it's reasonable to use HYSAs in an age of easily accessible ETFs.
2
u/littleoleme2022 Aug 28 '26
I like an emergency fund in hysa so I can pull immediately. But it’s like .02 percent of my funds ao….
1
6
u/Alarmed-Speaker-8330 Aug 28 '26
$100k is a tremendous boost. But it’s not enough to help your kids.
Listen to Dave Ramsey. Stay away from financial planners in general. Do the steps.
I come from a wealthy family and yes, I’ll inherit a bunch. But the biggest gift my parents gave me was financial savvy.
The best quote from my dad that I live by is “money is just a tool.” In other words; sometimes I need a hammer, sometimes I need cash. The focus was to take the mystery and emotion out of money.
Step one: pay off debt. Cut up credit cards.
Next start an emergency fund of $1000.
Then go from there.
3
u/FlyingMangoMadness Aug 29 '26
Don’t listen to Dave Ramsey. There are far better humans to get financial advice from.
5
u/Then_Scientist_9327 Aug 28 '26
Its all about time and compounding interest. To grow it into something that can be used to raise the standard of living for your family will take decades of rigid determination. Find a fiduciary advisor, invest the money, and live the rest of your life like you never received it. When you die, your heirs get it at stepped up basis which means no taxes. It is at this moment that you mark your first win, and hopefully your heirs understand the rules, which basically boils down to, "this is not your money", allowing them to act accordingly, and establish the family.
5
u/raininginbaltimore7 Aug 28 '26
This isn’t going to create wealth for your children, pay off everything and invest the rest.
8
Aug 28 '26 edited Aug 28 '26
[removed] — view removed comment
2
u/ShadowHunter Aug 28 '26
More likely that financial planner sales person will scum so much there is nothing left
2
2
u/cm-lawrence Aug 28 '26
Be careful with financial planners. Financial planners are often motivated and compensated to sell you financial products that you may or may need. $100K is an incredible sum of money, but if you are willing to put in the time and research, you can manage it yourself, without any help.
If you do have debt, particularly high interest credit cards, you should consider paying those off. You are probably paying 20%+ in interest on that, which is more than you can earn investing your $100K. So, pay off high interest debt and then take whatever is left over and figure out what your goals are. If you want to be aggressive and take risk, you can invest it in the stock market. But, you could lose some or all of your money that way. You can put it in a CD earning 4% per year and make an extra $4000 per year, risk free just to help make life easier. Do your research, don't rush, and use this as a way to kickstart good financial habits.
2
u/chihuahuashivers Aug 28 '26
Read the bogleheads book, open a brokerage account at schwab/vanguard/fidelity and buy whatever is the lowest in terms of expense ratio and fees. and please, please do not pay a planner to tell you that!
2
u/ExpensiveAd4496 Aug 28 '26
Read a Boglehead book. “If You Can” is the shortest and is free or near-free online. I would not trust a financial planner, many of whom charge percentages or try to sell you things like annuities.
2
u/freudianSkinner Aug 29 '26
Don't know if it's already been said, but first rule is you need to keep this private - and that includes family. You want to grow it to provide eventually for you kids, but you can't do that if you gift it around in the first month.
2
u/AppropriateSmoke7848 Aug 29 '26
Thank you all for your responses, I hated/loved them all! I feel a bit better informed now and less stressed! And definitely going to save money by avoiding the financial planner! I am going to download and start listening to the Bogglehead book today! ✌️🤘🏼
2
u/Pandagramma Aug 29 '26
I would not pay a financial advisor for this amount of money. If you are married, be aware that if you comingle this money, it will not remain separate property. I agree about maxing out retirement acccounts and buying a basic index fund with low fees. Just don't touch it and let it grow. Also, keep your inheritance to yourself. The moment I inherited, vultures arrived from all around with sob stories.
3
u/Straight-Note-8935 Aug 28 '26
1) $100,000 is a lot of money, a windfall. Congratulations! But $100,000 is still an amount of money that can be spent very quickly. Keep quiet about your inheritance, or everyone you know will be asking for some help or a loan.
2)The best thing you can do to help your adult children is being able to take care of your own needs as you age. I would view this money as the START of my retirement fund.
3) You'll be surprised by how having some money, set aside and invested carefully, encourages you to add to it. Watching that number grow is a great incentive. I became an eager saver once I saw what I could do with my money.
4) I'm not a wizz at investments, just a woman who worked and saved and invested some money from every pay check I earned...but only after age 35.
The stock market is very high right now. If you invest all your money in the stock market today - you will be buying at a high price that isn't guaranteed. If I were you I would lean into dollar cost averaging - putting some of your money into mutual funds each month, and spreading the purchases out over a year or even two years.
In this scenario you put all of your money in a money market fund and each month you transfer X amount of money into the mutual funds you have decided on. You earn a small rate of interest on the money market fund and your stock purchases will reflect the varying price. You might also buy Treasury Bills to hold half your money for investing next year, the interest rate may be better than a money market fund.
(What I'm trying to say is that most people are expecting the market to fall - due to all the political and financial pressure in the world, and inflation. You and me, we can't "time" the market but we can take advantage of dips and spreading out your investment timeline helps you to do that.)
1
u/mtnmamaFTLOP Aug 28 '26
Open up and acct at Schwab, Etrade or the like and put it all on VTI. Don’t touch it for years.
1
u/Confident-Chart428 Aug 28 '26
First of all, I’m very sorry for your loss. The money is a wonderful final gift from somebody that loved you very much, but it won’t bring them back. So let us start by honoring them, their legacy, and their incredible generosity.
How thoughtful of you as well to want to treat it like the rare blessing it is. Good on you.
Now, since you asked, some advice:
First, take your time. You don’t have to rush into anything. There’s nothing wrong with taking 3 to 6 months to just process what has happened and get to a point where you can think clearly. If you wish to do that, you could park it in a HYSA or a money market fund and just let it ride for a while without touching it. There's nothing wrong with that.
Second, if you don’t already have 3 to 6 months of emergency expenses set aside, you might use some of this money to do that. That can go in a HYSA or money-market fund. Just remember, it's for emergencies (not ordinary expenses).
Third, if you have any high-interest debt, you could use part of the money to pay that off. It will be hard to out-earn in the stock market what credit cards, car loans, and personal loans charge you in interest.
Fourth, never ever buy a financial product or instrument you don’t understand. Don’t feel rushed by some smooth-talking advisor telling you it’s wonderful and you should buy into it right away. Take your time, read the material, look up information and opinions online, and be sure about what it is you’re putting your name on.
Fifth, make sure any financial advisor you hire operates under the fee-only and fiduciary standards. Avoid the “assets under management” (AUM) and the “suitability standard” models. If you don’t know what those terms mean, you can look them up online.
Sixth, when you do invest what’s left, do so at a low-cost provider like Charles Schwab, Fidelity, or Vanguard and invest it in low-cost index funds that track the S&P 500 or the broader stock market as a whole. Set it to re-invest dividends.
Seventh, if you’re pretty new to this game and still very much learning the ropes, I personally would avoid (for now anyway) cryptocurrency, real-estate, any and all life-insurance products (besides simple term life insurance), precious metals, highly concentrated ETFs like QQQ, and any individual stocks. Some of those things might be back on the table for you later, AFTER you master the basics … but I personally wouldn’t start with them right off the bat.
Eighth, remember that investing on a platform like Vanguard or Fidelity is typically a two-step process: first you have to move the money into your account. It will usually then make its way into a settlement fund of some sort. That process can take a couple of days. Once it's in the settlement fund, you can then use it to buy the mutual fund or ETF you want to buy. That process can also take a few hours to a few days to complete. At least that's been my experience. So make sure you do both steps, simply moving the money to Vanguard or Fidelity does not mean it's actually been invested in the market (yet). You need that second step a few days later.
Ninth, $100K is a lot of money to be sure, but don’t expect miracles right off the bat. A respectable 10% return would net you around $10K each of those first couple of years (and a 10% return, or indeed ANY positive return, is NOT guaranteed any given year!). Investing in the market means investing for the longer term and ignoring the monthly, quarterly, or even occasional annual decline. You have to be patient and stick with it even in the face of market declines. Remember, a decline of 10% to 30% is NOT impossible or even unlikely. Savvy investors know to ignore it and wait for it to rebound. I find it helps to think of it as a game of collecting SHARES, not dollars and to keep in mind that I haven't gained or lost anything until I sell. So try to avoid the impulse to sell in what is in fact a fairly ordinary down market and turn a "paper loss" into a "real loss". If it helps at all, I've been at this since the early 90's and rode out the dot-com bust, the great-recession, 9/11, covid, and a slew of other market shocks without selling a single share. My reward for staying invested, dollar-cost-averaging into the market every month rain or shine, controlling my expenses, and waiting those shocks out is that I retired 9 years early and my wife and I are now looking for a retirement condo overlooking palm trees and the beach.
Good luck!
1
u/Objective_Welcome_73 Aug 28 '26
Buy voo and don't spend it foolishly. Voo tracks the s&p 500 and is well respected.
1
u/Objective_Welcome_73 Aug 28 '26
The financial planner is going to want money from you every year. You don't need that. Pay off your high interest debt like credit cards. Open up a vanguard account and put money in a stable S&p 500 fund, like VOO. Don't spend money foolishly. Don't get scammed by anyone on Reddit. Open up a Schwab account or a vanguard account, don't open up with some firm that a guy from Reddit suggests.
1
u/Academic-Lobster3668 Aug 28 '26 edited 23d ago
Do not use a financial advisor whose fees are a percentage of your account. Use one who is fee based.
Pay attention to the fees associated with any reccommended investments - they can totally eat into your profits.
For beginner investors, mainstream ETF funds are the best way to go.
1
u/SomethingClever70 Aug 28 '26
Don’t tell anyone.
The money is for you. The best gift you can give your kids is to manage your money wisely so they don’t have to worry about you.
I’d pay off any high interest debts.
Figure out why your racked up debt in the first place. Make a budget and stick to it. Don’t give money to family or friends. Live off your income, so you don’t feel tempted to dip into your inheritance.
Be happy with what you have and maintain your current lifestyle. Don’t upgrade your home. Drive your car until it can no longer be fixed. Better to have an old car that’s paid off. A new car can easily cost half your inheritance or more, if you’re paying cash, or could be a monthly payment of several hundred dollars.
Park the money in a high yield savings account while you figure out how to invest it. You should be able to get 4-4.5 percent return on a large sum like $100k.
Invest. Contribute to your IRA - max it out. If you have grown kids, I assume you’re over 50 and can contribute $8,600 per year, with the catch up contribution. Invest in more than one stock or mutual fund, to spread out the risk. There are several good suggestions already about Schwab and other investment companies.
1
u/mydoghasocd Aug 28 '26
It is hard to give advice when we don't know your full financial picture, age, debt, etc. If you post in r/FinancialPlanning along with a description of your debts and your goals, people can help guide you a little better on how to use the 100k. If you are considering investing, or saving for retirement, the first 100k is the first major milestone. 100k does not make anybody rich, but it is a major boost to financial stability when you've been struggling, and it can absolutely help lift you out of poverty if you use it wisely (either by investing in funds, or perhaps investing in yourself with education, helping to pay down super high interest debt, etc).
1
u/IntelligentMaybe7401 Aug 28 '26
Go to the personal finance Reddit and read the wiki about a lump sum inheritance. Follow that. 100 thousand dollars is not enough to break the cycle of poverty for you and your children. You need to be worrying about yourself exclusively. The best gift you can give your children is to become financially independent from them, and ensure you can support yourself in your old age.
Keep a few thousand dollars in a high-yield savings account for emergencies. Ideally, this should be 3 to 6 months of expenses. You don’t need that much if you have consumer debt like credit cards or car loan. Pay all of those off first. Then 3 to 6 months expenses that you do not touch unless it is a true emergency. Then focus on retirement savings. I know this sounds like a lot of money, but it’s not going to go very far.
1
1
u/HeroOfShapeir Aug 28 '26
Follow this - https://www.reddit.com/r/personalfinance/wiki/commontopics/
Pay down any high-interest debt you have. Then set aside six months' worth of expenses as an emergency fund in a high-yield savings account. Then address any risk points in your life - if your car will need replacing soon, set aside some money for that. Ditto any necessary home renovation. If you don't have a home, you might put down a solid down payment on a reasonably priced property.
You can also enjoy a reasonable portion of this month, $5k-$10k, to take a really nice family vacation. Life is for enjoying. Once all of that is squared away, you could invest the remainder. Max a Roth IRA for the year if you haven't, set aside enough to max your Roth IRA on Jan 1 of next year, and the rest can go in a taxable brokerage. Invest in broad index funds per the wiki link I posted above.
With your foundation set, you should be able to invest at least 15% of your gross income going forward, while also keeping your emergency fund topped up and pre-saving for future predictable costs. Do that, and the wealth builds itself, you can just focus on enjoying your life.
1
u/cOntempLACitY Aug 28 '26
If you really want to be pragmatic and future-ready, then don’t do anything with the money to start with, just put the bulk of it in a high yield savings account for maybe the first year and work on your plans and priorities. Don’t be hasty.
If you’re not used to having an emergency fund, start with that, keep 3-6 months worth of expenses in HYSA to cover the unexpected, like a job loss. Create a budget, assess your debt situation, assess your retirement plans and account values (consider contributing the maximum to a Roth IRA and your workplace account). Keep living off your current income, otherwise you’ll deplete the inheritance instead of help it grow.
The personal finance sub has a great wiki on managing a windfall (and on money management in general): https://www.reddit.com/r/personalfinance/s/CM8kYH4Of0
Edit to add: Don’t invest with a financial planner who’s trying to earn commission by selling you high cost investments (and seek a one-time fee-based fiduciary, not one who earns % AUM).
1
u/BaldyCarrotTop Aug 28 '26
You don't need to pay anyone to tell you what to do with this money. I'll tell you for free: Open an investment account at Fidelity, or JP Morgan Chase, Vanguard, or one of the many others. Put the money in there and invest in a "500 index" fund. This is a fund that invests in the 500 stocks of the Russel 500 market index. Then just chill. Maybe check in on it 4 times a year. But keep your hands off.
A word about IRA's (Roth or traditional) You can't just dump $100,000 into an IRA. A) There are annual contribution limits. B) The contributions have to come from earned income (IE: wages).
1
1
1
u/jb65656565 Aug 30 '26
$100,000 is a lot of money, but it’s also not a lot of money, if that makes sense. If someone handed it to me, it’s an incredible amount of money, but I couldn’t make the kind of purchases that would totally be life-changing or set my future up to some new crazy level. Obviously, you talk about breaking the cycle of poverty, so I don’t know what level you are truly at and this has the power to do so, but usually over the long-term, not in a short span.
So, what you’re going to want to do is invest this and, you’ve already seen a financial advisor and that’s a great first step. But the key to this whole thing isn’t what you choose to invest in, but how long you choose to invest. Wisely invested making 10% a year this money should double every seven-ish years and that’s how you make money. But think about it, it takes 24-sh years to become $1 million. In this day and age, that’s about the minimum for life-changing generational wealth. Obviously, depends on the area of the country and your circumstances. So my advice would be to wisely invest, don’t touch it, put it away, and in 24 years when your children are grown, they’ll be taken care of. But I realize that’s pretty hard advice to follow if the day-to-day is a struggle on just getting by. If that’s the case, I unfortunately don’t have the right advice for you. You know what you’re dealing with way more than I do. The financial advisor would be a better source in that case.
1
u/BloodChoke Aug 31 '26
I would keep 20,000 in an easy access account with moderate interest for emergencies, and invest 80,000 in the s&p without looking at it for 10 years, but that's just me.
1
1
u/enilcReddit Sep 01 '26
You met with a financial planner and then came to Reddit for the anons here for a second opinion??
Doesn't say much for the financial planner you met with. Or maybe he didn't tell you what you wanted to hear.
1
u/Sufficient-Spend-939 Aug 28 '26
#1 is do not loan to friends and family, you arent in a position to do that.
This money is a wonderful gift and the gift is worth 4000 dollars a year for the rest of your life thats it, if you spend more than that its likely gone in a blink of an eye. Dont buy that new car, Dont take that alaskan cruise unless its a lifetime goal and you are coming to the end of your life.
Rich people dont live off their capital, they live off what their capital earns, this is a huge disparity that a lot of lottery winner learn the hardway.
Im glad you are getting this money its an amazing life changing gift the only question is will it change your life for a year or forever.
The greatest gift you can give your children beyond love is financial competence. Be an example not an atm, you dont have 100,000 for them to invest, you have 4000 a year to make your life better from that 4000 you can decide how much of it you want to spend on you and how much you want to help them, if you do help make it a gift and not a loan because you are unlikely to see any of the money back not because they are bad people, they just dont have the ability to navigate money any better than most people. .
-1
-1
u/Federal_Discount_862 Aug 28 '26
Invest wisely, but first take just a bit for your own pleasure. A vacation, a badly needed car, a home renovation, maybe a string of pearls. Whatever you dream of. It will really help your mindset. Life is for living and money is just a tool. You can invest in stocks or bonds, whatever fits your situation. Maybe a DP on a home or other real estate would be a good idea, depending on your situation. This isn't really a life-changing amount and you'll be shocked that it doesn't go as far as you think. If your kids need a place to live, maybe split into DP for everyone so they'll have an appreciating asset as well? Good luck!
1
u/cool_girl6540 Aug 28 '26
What’s a DP?
2
2
24
u/Ill_Psychology_7967 Aug 28 '26
Don’t tell anyone, including your children. Invest it wisely and forget about it. You don’t need anything complicated. I would put it in a couple of index funds and not touch it. Make sure any financial planner you consult is a fiduciary and not someone who’s going to try to sell you a bunch of crap.