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Never invest an inheritance into a business. That is the worst mistake you can make. If the business tanks, then what do you have left??
We own our own business and do a lot of investing. The market has changed over the years and much more so recently. Do your research and talk to some financial advisors. Determine what your needs are - when will you need to tap into your money? Hope fully not for a while.
I had my first meeting in over 20 years with a senior financial advisor today. I am considered to be a well informed investor and reasonably good. I told him since the dot com bust and given recent events in the market, had people simply put all their investments into a 5% CD, I believe they would have done just as well if not better. He agreed. I am at a point where I have to plan the next decade towards retirement and when I will be drawing on my retirement money.
I think what I was trying to say is, yes, I want to first buy a home. However, property in TN is aprox 1/3 the cost of that in Los Angeles (San Fernando Valley). Because of this, I want to buy low (house for about $120K) and then invest the rest of the money.
Here's what I have looked into;
1) A CD for one year at the highest interest rate I can find.
2) Buy another house or rental property (2-4 units)
3) Another investment in the stock market (feel this is too high risk however)
4) Seeking some way to live off the interest or use interest as a large income supplement, i.e., annual CD rate of return.
My asking, "What would you do?" was seeking ways to invest that might yield a medium risk return.
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
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I'd be getting some good tax advice very quick (BEFORE inheritance shows up !!!).
It may be worth moving to a non-income tax / tax friendly state to get inheritance and to pay 2008 taxes (which I will bet is not CA !!!). You can establish residency several ways, but I'd rent a room or RV spot in a nice area and change Drivers License and get a PO Box, and probably utility hook up (cell phone?), like TOMORROW (after consulting a WISE accountant, familiar with out of state taxation). Retirees do this often (full-time RV or international trekkers), and you are planning to leave CA anyway. I think TN is the better of your two locations for taxes and terrain / diverse climate and retiree friendly. There is a knowledgable poster in TN forum (LauraC). And also some good retirement sites with tax and Cost of living info.
Congratulations, I'd be packing my bags, or hopefully you have done that. You might need to set up your tax home in NV or TX to be more convenient during future home search. Getting near an ez and cheap airport would be handy. Another possibility, if you are interested in PNW, living (have tax address) in Vancouver, WA (income tax free) and commuting via Portland, OR airport. OR is sales tax free, airport is 5 - 10 min from Vancouver, airport is small, well served and several airlines have direct flights to their hubs. 1.5 hrs to beach, mountains (ski / Hike Hood or Adams) and Mt St. Helens. a few moments to adequate culture in Portland or Vancouver
I would assume the inheritance could rachet your rate in 2008, so I would try to limit any other income, get it invested into something very diversified; some of it with chance to grow, and... determine how you can get enough cash-flow to get by, and hopefully structure your accounts to provide a continuous cash flow, or examine your another options. I retired pre-50, and am back in school by choice, but will soon be fitting in significant travel in USA to find various places to nest, followed by at least a yr of international travel, burning up airline mileage and enjoying living in other countries. (Have done business assignments in Asia and Europe)
for my future 'nest' site
I want, Moderate climate (no humidity, and less rain than current 100"/yr), semi-rural town or acreage, near college, and decent airport. Lap swimming at a community center would be a plus. Low fixed costs (property taxes, property costs) is important, as potentially 50 yrs in retirement W/O healthcare or pension means I need to be cautious.
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
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Quote:
Originally Posted by Pocketplayer
I live in So Calif and was just informed I will shortly be getting an inheritance of $350k.
So I ask...what would you do?...
Thoughts, comments, suggestions to ponder???
check this site for state by state tax issues (tho it may be dated, so verify once you decide)
Taxes by State (this site indicates both IN AND TN has an inheritance tax (separate from estate tax) that might be bad!!) But CA is not listed, tho inheritance may be taxed as income - you really need a good acct.!
I'm all for putting some of the $$ to work in other assets, including rentals (if they 'cash-flow' and are in an appreciating market). I'm less likely to pay off a primary residence, as it is often a way to get cheap money. Do what fits your comfort level. And do lots of hunting for both properties and investment equities. Take ALL advice as skeptic, and be careful of "money managers" who might want to 'help you dispose of some of it.
You will also want to be paying quarterly 'estimated' fed tax at a rate of 110% of last yrs, to avoid a penalty if you don't pay Fed tax on inheritance till April 2009
First of all, I wouldn't do anything LONG-TERM with the money until you have moved and gotten settled in. What if you move to Tenn. and it takes 6 months to find a job? You will need access to the money just to live.
Once you have settled down somewhere (and I would rent the first year until learning the area because there's nothing worse than buying a house and then realizing its not the neighborhood you want to live in) I would use part of the money as a down-payment and mortgage about 80% so that you have a write-off. You can keep the equivilent of the 80% in something safe, like a CD if it makes you feel more secure.
You mentioned possibly investing in an income property. I think thats a great investment, but some people don't have the stomach for being a landlord. That is something only you can answer.
I'd buy the house, settle in, get all your taxes paid, and then worry about the rest.
We used to buy CD's in schedules. Like we bought a 1 year one every 3 months so we would have access to 25% of our money every 3 months. We kept just rolling them back, but it's better than putting it all in a 1 year at same time.
I'd watch out for scummy relatives and 'friends'. I hope you don't have any scummy ones, but the scummy grow very chummy when they see the possibility of wheedling 'loans,' gifts and other forms of freebies.
If any financial adviser utters the word 'annuity' to you, you have two options:
1) (probably safer legally) Walk out without a word.
2) (risky but very satisfying) Urinate on his or her shoes, then walk away.
Either would probably work out.
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