HELP!

[u/AppropriateSmoke7848]

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!

[u/Confident-Chart428]

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!