Inherited money, what now? (bonds, brokers, mutual funds, calls)

[PokerMunkee]

Background:

Going to inherit around $200,000 in the next month. We have about $12k in credit card debt that will get paid off and another $30k I want to put into our home for remodels (siding, decks, roof, garage door). My wife's federal student loan is 4 years from being paid off at 2% interest ($220/mo) and her car ($360/mo) has 2yrs left at 4% ($10k pay off currently). I have a good salary ($88k) and the wife will start working again soon ($800/mo after tax). So good steady income. We are both 30 years old with two kids. We have $20k in retirement accounts from previous jobs before we were married, making a little bit of money. Been living pay check to pay check in the last few years after we bought our home and put about $30k of upgrades into it, thus our CC debt.

So lets say I have $150,000 left to invest after paying off CC's and upgrading house.

How do I go about finding out my options? Who do I talk to? Just need some info to guide me to the next step. Do I need a financial advisor? Is it possible to find a no risk 4-5% rate? I see treasury rates are mid 2's.

[bale002]

Originally Posted by PokerMunkee

Background:

Going to inherit around $200,000 in the next month. We have about $12k in credit card debt that will get paid off and another $30k I want to put into our home for remodels (siding, decks, roof, garage door). My wife's federal student loan is 4 years from being paid off at 2% interest ($220/mo) and her car ($360/mo) has 2yrs left at 4% ($10k pay off currently). I have a good salary ($88k) and the wife will start working again soon ($800/mo after tax). So good steady income. We are both 30 years old with two kids. We have $20k in retirement accounts from previous jobs before we were married, making a little bit of money. Been living pay check to pay check in the last few years after we bought our home and put about $30k of upgrades into it, thus our CC debt.

So lets say I have $150,000 left to invest after paying off CC's and upgrading house.

How do I go about finding out my options? Who do I talk to? Just need some info to guide me to the next step. Do I need a financial advisor? Is it possible to find a no risk 4-5% rate? I see treasury rates are mid 2's.

By no means risk free, but you can earn 4%-5% with some combination of relatively conservative bonds (government, municipal, corporate), dividend-paying stocks, real estate investment trusts (REITs, they trade like stocks), and Master Limited Partnerships that invest in energy infrastructure (they trade like stocks).

You need to contact a broker, perhaps at a money-center bank or independent but experienced brokerage firm, or you could go with a discount brokerage like Scott Trade. Best, in any case, is through a personally known contact. Interview several of them. And don't forget to ask about their annual management fee (could be from 0.50% to 1.25% of assets) or commissions on individual securities purchases, and any other fees, expenses and commissions.

That's a good start, others will provide more detail, will ask more questions about your financial goals.

All the best!

[lifelongMOgal]

Consider contacting a certified financial planner who is not going to profit by selling you financial products. You need to take into account tax planning, college plans for the children, funding your retirement plans, paying off debt, estate planning (insurance), etc... . Then, once you have a plan in place....seek a reputable broker.

Go in with your eyes wide open and know how much risk, if any, you and your wife are willing to take. Educate yourself on investing rather than trusting a 3rd party to handle it all for you. Afterall, it is your money at risk; brokers/fund managers get their fees whether you win or lose in your investments.

[Pivot Point]

Originally Posted by lifelongMOgal

Consider contacting a certified financial planner who is not going to profit by selling you financial products.

Go in with your eyes wide open and know how much risk, if any, you and your wife are willing to take. Educate yourself on investing rather than trusting a 3rd party to handle it all for you. Afterall, it is your money at risk; brokers/fund managers get their fees whether you win or lose in your investments.

^^^^ This.

Many financial planners have an agenda: they need to sell certain stocks for their company, regardless of whether they are in your best interest or not. Thus the need for you to educate yourself about investments. You must stay on top of what's happening in your accounts.

[MrRational]

Originally Posted by PokerMunkee

...another $30k I want to put into our home for remodels (siding, decks, roof, garage door).

If (BIG if) this means that YOU have some trades skills and the rest sounds like you're settled
into your town and have stable income/lives generally... this might be the time to look into rentals.

Do that looking with competent help including a CFP and all that.

[bmw335xi]

You should talk to a well-rated financial adviser or wealth manager and get a prospectus. It won't cost you anything to have a consultation but may give you some good ideas or starting points to research on your own.

[killer2021]

Originally Posted by Marie1249

^^^^ This.

Many financial planners have an agenda: they need to sell certain stocks for their company, regardless of whether they are in your best interest or not. Thus the need for you to educate yourself about investments. You must stay on top of what's happening in your accounts.

100% true.

I had a friend who was a CFP and originally he started by picking individual stocks and actively managing all his client accounts. It took too much time and he didn't get much results (didn't beat the market). He also openly admitted that he didn't really know any secrets to picking stocks (too many variables). Now he just pushes his clients into certain funds where he gets kick backs, no joke. They aren't scam funds but they are like mutual funds where brokers get a commission.

Oh yes and he uses all that, "you need a trained professional" to manage your money. The stock market is risky blah blah blah... type of stuff. People fall for it hook line and sinker. He calls himself a, "financial psychologist." How funny is that?

[samnyc]

Stay away from financial advisor..... they are nothing but a good sales person. They only want to sell sh## to you.
Trust me, I went to certfited financial advisor, he wanted me to buy whole life insurance, then disability insurance. He asked me to take insurance on my kids. I am not kidding. This is a true story. At the end, he put the money in some never heard of Mutual fund.

since you have long time to invest, I would take some time to learn or take some classes. No one will care for your money then you do.

[PokerMunkee]

Thanks for the advise all. Interesting about financial planners, looks like I need to start talking with people that I know have a lot of $$ and see who they recommend.

[Billy_J]

I would suggest NOT spending a dime of what you inherit...

Rather invest it all and only spend the income you get from that. Then you will still have the 200k.

For example energy stocks have some pretty good dividends lately. Say you get 15%. That is 30k a year in income.

If you go out and spend 100k right now, then invest 100k, you would then get 15k a year in income.

Just be sure the companies you invest in have a track record of paying about the same dividends, that they are in good financial shape, and will remain in good financial shape. With something like oil, the world is not going to stop using oil, so that is a pretty steady income. Just be sure to read EVERYTHING about the company or investment (news, etc.) before investing. Understand what you are buying.

Also if someone tries to sell you a mutual fund, ask how much the fees are and how much you WILL RECEIVE yearly in DIVIDENDS! Many of these will show a return of say 10%, but that includes an increase in value of the mutual fund over the past year. It is not what you are paid in dividends!!!

You might want to poke around here**
Dividend.com - Dividend Stocks - Ratings, News, and Opinion

**You may find some companies which have recently paid 28% in dividends, but that may be because of a one time payment. Not likely to be a regular thing. Might be better to find companies with consistent dividends. Look at their history.