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Started By
Message
What to do w/ $500,000
Posted on 2/7/24 at 7:03 am
Posted on 2/7/24 at 7:03 am
-Currently inherited approximately $535,000 from an estate.
-It’s sitting in a money market account making approximately $2,400 a month.
-I plan on investing / dollar cost averaging in small increments ($10,000 $15,000), BUT:
-Wife and I have student loans around $88,000 (monthly payment is approximately $890.00)
-$300,000 mortgage, but with a 3.1% rate
-No other real debts…we will likely “look” to move in the next 3-5 years…depending on job, stability, prices, rates, inflation, etc…
-We’ll be looking to get another car in say 3 years. My GMC Silverado currently has 170,000 miles.
-I was going to tackle the student loan first, but I’m currently covering it and more just with the monthly interest. We can also cover our debts and monthly living expenses without going to savings or touching this money. That said, it inhibits how much we can invest monthly AND I’d rather invest than have it in a money market. Also, what would you do knowing you’d need a car and potentially a new home / down payment in the foreseeable future?
What do you think?
-It’s sitting in a money market account making approximately $2,400 a month.
-I plan on investing / dollar cost averaging in small increments ($10,000 $15,000), BUT:
-Wife and I have student loans around $88,000 (monthly payment is approximately $890.00)
-$300,000 mortgage, but with a 3.1% rate
-No other real debts…we will likely “look” to move in the next 3-5 years…depending on job, stability, prices, rates, inflation, etc…
-We’ll be looking to get another car in say 3 years. My GMC Silverado currently has 170,000 miles.
-I was going to tackle the student loan first, but I’m currently covering it and more just with the monthly interest. We can also cover our debts and monthly living expenses without going to savings or touching this money. That said, it inhibits how much we can invest monthly AND I’d rather invest than have it in a money market. Also, what would you do knowing you’d need a car and potentially a new home / down payment in the foreseeable future?
What do you think?
This post was edited on 2/7/24 at 7:29 am
Posted on 2/7/24 at 7:11 am to GentleJackJones
quote:
What do you think?
You should get a financial advisor. Random internet people aren't going to give you the advice you really need.
Posted on 2/7/24 at 7:15 am to GentleJackJones
Lowest priority mortage
Possibly mid priority - Student Loans. But that could be wiped within the decade. Maybe hold off to see who wins the election on that ine but what is the interest rate on this?
Invest in the market SP500 ETFs are a good start.
Individual stocks that you believe in.
And of course my reckless side recommendations
$35K into BABA DCA over the next few months
1BTC
$10K into Chainlink
Not financial advice.
Possibly mid priority - Student Loans. But that could be wiped within the decade. Maybe hold off to see who wins the election on that ine but what is the interest rate on this?
Invest in the market SP500 ETFs are a good start.
Individual stocks that you believe in.
And of course my reckless side recommendations
$35K into BABA DCA over the next few months
1BTC
$10K into Chainlink
Not financial advice.
This post was edited on 2/7/24 at 7:19 am
Posted on 2/7/24 at 7:22 am to GentleJackJones
What’s the rate on the student loan debt?
Posted on 2/7/24 at 7:34 am to GentleJackJones
Pay off your student loans.
1) Peace of mind and closer to debt free. Can't place a value on that.
2) Yes, your interest covers the loan payment. But you still make interest after paying off the loan.
Interest on 500k @ ~6% is making you $2400. Less $890 for student loans you are netting $1510.
Pay off $89k in student loans and that $890 monthly goes away. $500k less $89k for loans means 6% interest on $411k, or almost $2k monthly.
Paying off the student loans nets you $400+ a month more, right now.
For the other stuff, definitely don't pay down house. It's free money. Don't worry about a potential car in three years, cross that bridge when you get there, your situation will be fluid and you'll have plenty of new options to consider then. Not worth worrying over right now.
1) Peace of mind and closer to debt free. Can't place a value on that.
2) Yes, your interest covers the loan payment. But you still make interest after paying off the loan.
Interest on 500k @ ~6% is making you $2400. Less $890 for student loans you are netting $1510.
Pay off $89k in student loans and that $890 monthly goes away. $500k less $89k for loans means 6% interest on $411k, or almost $2k monthly.
Paying off the student loans nets you $400+ a month more, right now.
For the other stuff, definitely don't pay down house. It's free money. Don't worry about a potential car in three years, cross that bridge when you get there, your situation will be fluid and you'll have plenty of new options to consider then. Not worth worrying over right now.
Posted on 2/7/24 at 7:39 am to GentleJackJones
I would leave the Mortgage alone. You are making money with a 3.1. The student loans would bother me, I would get them and anything with interest higher than 5% gone. 100K in high return cash, invest the rest.
Posted on 2/7/24 at 7:42 am to GentleJackJones
Go on a nice vacation.
Posted on 2/7/24 at 7:42 am to GentleJackJones
-If rate on student loans is >7% I'd pay them down some
-Leave 6 months E Fund + any confirmed CAPEX (new house, major expenses, truck etc.) for the next 3 yrs parked in the MM fund (VUSXX yield is 5.44%)
-Max out all tax deductible avenues (401k's, 529's, HSA, TIRA if eligible etc)
-Data says lump sum beats DCA more often than not but being an election year, market ATH, global sh*t show and relatively large balance I'd lump sum 50% of what's left and keep the rest liquid. If/when things get rough cash creates lots of opportunities - people liquidating toys, real estate etc.
-Leave 6 months E Fund + any confirmed CAPEX (new house, major expenses, truck etc.) for the next 3 yrs parked in the MM fund (VUSXX yield is 5.44%)
-Max out all tax deductible avenues (401k's, 529's, HSA, TIRA if eligible etc)
-Data says lump sum beats DCA more often than not but being an election year, market ATH, global sh*t show and relatively large balance I'd lump sum 50% of what's left and keep the rest liquid. If/when things get rough cash creates lots of opportunities - people liquidating toys, real estate etc.
This post was edited on 2/7/24 at 7:44 am
Posted on 2/7/24 at 8:14 am to GentleJackJones
I would pay off the student loans
Id purchase or put a heavy down payment on some sort of rental property
Keep the rest of the money in that money market and use the interest to cover expenses that pop up for your rental
you may even want to get another rental if you like it
Id purchase or put a heavy down payment on some sort of rental property
Keep the rest of the money in that money market and use the interest to cover expenses that pop up for your rental
you may even want to get another rental if you like it
Posted on 2/7/24 at 8:17 am to GentleJackJones
Knock out the loan.
Don't pay off the house.
Place the vehicle funds in something to get a return for a couple years.
Take a vacation you wouldn't otherwise do.
Don't pay off the house.
Place the vehicle funds in something to get a return for a couple years.
Take a vacation you wouldn't otherwise do.
Posted on 2/7/24 at 8:46 am to GentleJackJones
NVM
This post was edited on 2/7/24 at 8:48 am
Posted on 2/7/24 at 9:02 am to GentleJackJones
What’s the probability that grandpa Joe wipes out your student loans??
Posted on 2/7/24 at 9:16 am to GentleJackJones
If interest rate on student loans is above 6-7% I'd pay it off.
After that, I'd fund retirement tax advantaged accounts next. Max IRAs and 401ks etc. You may need to use some of the inheritance to live on while bumping up contributions.
Careful if you go the advisor route. Many are salesmen and will try to persuade you to buy high fee products that arent best for you like whole life insurance, annuities or loaded mutual funds. They will also most often charge a % of assets under management which even at 1% will often cost you something like 25% of final balance after 20-30 years. I prefer self managing and buying low expense ratio index funds.
Finally, how are these funds being inherited? Is it an inherited retirement account or just funds from estate?
After that, I'd fund retirement tax advantaged accounts next. Max IRAs and 401ks etc. You may need to use some of the inheritance to live on while bumping up contributions.
Careful if you go the advisor route. Many are salesmen and will try to persuade you to buy high fee products that arent best for you like whole life insurance, annuities or loaded mutual funds. They will also most often charge a % of assets under management which even at 1% will often cost you something like 25% of final balance after 20-30 years. I prefer self managing and buying low expense ratio index funds.
Finally, how are these funds being inherited? Is it an inherited retirement account or just funds from estate?
This post was edited on 2/7/24 at 11:58 am
Posted on 2/7/24 at 9:18 am to GentleJackJones
quote:
t’s sitting in a money market account making approximately $2,400 a month.
I'd take that a buy a rental property. If you don't have renters you already have the mortgage payment. If you get renters you can start stacking more money towards another rental.
Posted on 2/7/24 at 9:32 am to GentleJackJones
quote:
-Currently inherited approximately $535,000 from an estate.
-It’s sitting in a money market account making approximately $2,400 a month.
-I plan on investing / dollar cost averaging in small increments ($10,000 $15,000), BUT:
-Wife and I have student loans around $88,000 (monthly payment is approximately $890.00)
-$300,000 mortgage, but with a 3.1% rate
-No other real debts…we will likely “look” to move in the next 3-5 years…depending on job, stability, prices, rates, inflation, etc…
-We’ll be looking to get another car in say 3 years. My GMC Silverado currently has 170,000 miles.
I'm a bit risk-averse so take all of this with that in mind.
If I'm getting $2,400/month from the money, then I'm leaving the inheritance there. Tinkering around with a calculator it looks like your student loan interest rate is ~4%.
I would take $1,000 per month from the returns and throw it at the loans to pay the loan(s) off in about half the time (so 4-5 years instead of 9-10).
I would leave the other half to just continue rolling over in the money market. In 3 years (if the return remains at least the same), that extra $1,400/month is $50k without even taking compounding interest into account. In other words, depending on what I bought, I could just buy the new vehicle outright instead of adding a car note to my monthly bills. A year or two later, the student loans are paid off and the money which had been set aside for student loans then goes into investments.
In that 5 year period I've paid off more on my home while (ideally) it's increased in value. I can sell the home and use the proceeds for putting down on a new place plus I have somewhere over $600k extra (in the money market) to dip into to either buy the new place outright, just add to how much I am putting down to keep mortgage payments the same or lower, or just leave it to continue growing.
Posted on 2/7/24 at 9:37 am to GentleJackJones
id be buying property, several of them.
Posted on 2/7/24 at 9:47 am to GentleJackJones
I would put it all in VOO. Make minimum payments on my debt. In 10 years you will have 2MM. This is a simple math problem.
Posted on 2/7/24 at 10:16 am to GentleJackJones
quote:Seems like we would need to know more about your overall financial picture away from this windfall.
What to do w/ $500,000
-Currently inherited approximately $535,000 from an estate.
quote:Why? Just invest it all now.
-I plan on investing / dollar cost averaging in small increments ($10,000 $15,000), BUT:
quote:Student loan debt is the one debt I like being aggressive with paying down in these situations - it's non-dischargeable. 'd consider just getting rid of it.
-Wife and I have student loans around $88,000 (monthly payment is approximately $890.00)
quote:Make it your business to NEVER pay this back.
-$300,000 mortgage, but with a 3.1% rate
quote:How old are you? You only live once. If you want a new car, get a new car.
-We’ll be looking to get another car in say 3 years. My GMC Silverado currently has 170,000 miles.
Posted on 2/7/24 at 10:19 am to GentleJackJones
Don't mingle it with your community assets
Posted on 2/7/24 at 10:41 am to GentleJackJones
Put 500k on red. You win, you can pay off all debt and still keep the 500k in money market
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