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What I'd like to see you do with the money is actually fairly boring (but not too boring). Put it in a mutual fund that invests in a mix of stocks and bonds.
If you don't know what those are, it's time to look them up at:
You do need to have some knowledge before you invest, but don't overanalyze it, either...that will prevent you from ever doing anything.
So invest in a mutual fund like Vanguard Wellington. It invests 65% in large company dividend paying stocks and 35% in bonds/cash. If you invest the whole amount and don't touch it, and you manage to get 8% returns (not guaranteed, but the fund has returned over 8.5% over the last 15 years), you'll have $1,027,782. So you have a very good chance of being a millionaire by age 40 if you just invest the money and don't touch it until then.
Vanguard Wellington is known as a "moderate allocation" or "balanced" mutual fund. It's not too aggressive, not too conservative. It will have years when it makes money and years when it loses money, but the good years will likely outnumber the bad years. The fund will probably lose money 1 out of 5 years, on average.
You have a huge opportunity here. I'm suggesting a fairly conservative (but not too conservative), conventional path here. The hardest part will be not touching the money. Also, be aware that having $1,000,000 is not going to mean you'll be living a fabulous lifestyle if you want the money to last. You can typically only take $40,000 a year from a portfolio worth $1M if you want the money to last (and some people are saying even $40,000 might be too much). $1M in 16 years will certainly be worth less than it is today due to inflation. But there are very few 40 year old millionaires out there today, and I expect that will still be true 16 or 17 years from now as well.
OP, this is excellent advice. Properly invested and NOT TOUCHED for several decades, the 300k you've inherited will make you financially independent for the rest of your life. And given how little job security anyone has these days, that's an exceptionally valuable cushion to have.
--I agree with the advice to watch out for trade schools. Vet them very, very, carefully. This is also true for any college/university as well. Be very careful on what you study as well. You want it to be marketable.
--I know it sounds crazy, but I sort of think it might be better to borrow money for whatever school you go to and leave the money alone to compound. I really don't like the idea of you touching this money at all until it generates enough income for you to live off entirely (which would be at leats 25X your living expenses). Paying for education with this money would be a legitimate use, though, IF AND ONLY IF, you are very careful about the school you attend and what you study.
--Same deal for a business. It is very, very, very easy to blow through money running a business. If you want to start a business, I would do it small scale with money you earned on your own...When you do it with money that falls into your lap, you just won't do it with the same intensity and dedication you would with money you earned and saved on your own. I am not entrepreneurial and I really don't think most people are, so I am kind of against you starting a business., but I don't know you. Just know that you are going to have to work very hard and very smart (efficiently and at the right things...and be flexible enough to recognize when something's not working vs. needing to put more work into it...very tough decisions) to make any business work.
What I'd like to see you do with the money is actually fairly boring (but not too boring). Put it in a mutual fund that invests in a mix of stocks and bonds.
If you don't know what those are, it's time to look them up at:
You do need to have some knowledge before you invest, but don't overanalyze it, either...that will prevent you from ever doing anything.
So invest in a mutual fund like Vanguard Wellington. It invests 65% in large company dividend paying stocks and 35% in bonds/cash. If you invest the whole amount and don't touch it, and you manage to get 8% returns (not guaranteed, but the fund has returned over 8.5% over the last 15 years), you'll have $1,027,782. So you have a very good chance of being a millionaire by age 40 if you just invest the money and don't touch it until then.
Vanguard Wellington is known as a "moderate allocation" or "balanced" mutual fund. It's not too aggressive, not too conservative. It will have years when it makes money and years when it loses money, but the good years will likely outnumber the bad years. The fund will probably lose money 1 out of 5 years, on average.
--I also wouldn't buy a house or car or anything else with this money. Let that come out of earned income from a job. My reasoning goes back to the same thing....people tend to greatly overspend on these types of things when money falls easily into their laps...Don't be one of those people.
You have a huge opportunity here. I'm suggesting a fairly conservative (but not too conservative), conventional path here. The hardest part will be not touching the money. Also, be aware that having $1,000,000 is not going to mean you'll be living a fabulous lifestyle if you want the money to last. You can typically only take $40,000 a year from a portfolio worth $1M if you want the money to last (and some people are saying even $40,000 might be too much). $1M in 16 years will certainly be worth less than it is today due to inflation. But there are very few 40 year old millionaires out there today, and I expect that will still be true 16 or 17 years from now as well.
So, I'd open 2 accounts with Vanguard as soon as you get the money. 1. Open a Roth IRA. If you earned at least $5500 last year, you can put $5500 in Vanguard Wellington in your Roth IRA. 2. I'd put the remaining $294,500 in a regular, taxable account in the same mutual fund, Vanguard Wellington. The reason you have 2 accounts is because of tax treatment. Roth IRAs are retirement accounts and have some restrictions on pulling out the money, but they compound tax free.
So, I'd open 2 accounts with Vanguard as soon as you get the money. 1. Open a Roth IRA. If you earned at least $5500 last year, you can put $5500 in Vanguard Wellington in your Roth IRA. 2. I'd put the remaining $294,500 in a regular, taxable account in the same mutual fund, Vanguard Wellington. The reason you have 2 accounts is because of tax treatment. Roth IRAs are retirement accounts and have some restrictions on pulling out the money, but they compound tax free.
So you suggest putting all the money into investment accounts? Too bad, this plan is not realistic. The OP is not you, not me, not the average person that hangs around in this board. I myself would put 300k in my investment account in a heartbeat, but we're talking about the OP here. He is definitely not putting his money into something he is completely clueless about. And if the money all sits in investment accounts, chances are he will just continue his current lifestyle, knowing in the back of his mind that he has 300k and end up blowing it out of boredom.
OP, I suggest you find something that keeps you busy. Read some success stories of lottery winners for inspiration:
I would start with the education and job training first. The money gives you breathing room since you can afford to go to a school. It also allows you to afford to be able to move to where the jobs are plentiful and get a car. Once you get the training, work, and place of residence issues settled, I would look at financial issues. I would look at getting into an apprenticeship program for plumbers, electricians, etc. or in classes for driving commercial vehicles, whatever you decide you'd like to do for the long haul.
Number four is poor advice. You can get 1% from FDIC insured savings and 5 years locked up isn't the best advice.
One common misconception about CDs (long term CDs) is that the money is locked up with high penalties, etc. This used to be the case.
With banks like ally, the early withdrawal penalty is low enough that after only a few months or a year you usually come out ahead. When I wrote my post I was going off memory which was a 60 day interest penalty at ally for early withdrawal which is basically a no brainer to always go with the longer term higher rate and lower withdrawal even if you're going to pull your money out after like 6 months but checking now, they changed to a 150 day interest penalty.
Even if you only hold for 1 year or longer you will come out ahead by going with the longer term CD and paying the early withdrawal.
I only recommend this because he shouldn't rush into any investments and this is a good enough way to keep some money in the bank and get some more interest than a regular savings account.
But if you want 100% liquidity, a savings account is better.
One common misconception about CDs (long term CDs) is that the money is locked up with high penalties, etc. This used to be the case.
With banks like ally, the early withdrawal penalty is low enough that after only a few months or a year you usually come out ahead. When I wrote my post I was going off memory which was a 60 day interest penalty at ally for early withdrawal which is basically a no brainer to always go with the longer term higher rate and lower withdrawal even if you're going to pull your money out after like 6 months but checking now, they changed to a 150 day interest penalty.
Even if you only hold for 1 year or longer you will come out ahead by going with the longer term CD and paying the early withdrawal.
I only recommend this because he shouldn't rush into any investments and this is a good enough way to keep some money in the bank and get some more interest than a regular savings account.
But if you want 100% liquidity, a savings account is better.
Not all CDs have an opt out ability for starters and two why would it take you give years to get up to speed to make investment decisions ?
How long do you think it would take? Just curious.
If you can read a week or two and you should be able to be comfortable with some VOO or spy. Even if it takes months that's a long time, years? Come on man
If you can read a week or two and you should be able to be comfortable with some VOO or spy. Even if it takes months that's a long time, years? Come on man
What can you read in weeks that would give you the basics? I mean, specific sources. There is too much information out there.
And what do you recommend that the OP read? He probably doesn't even know what a stock is. And given his level of education, I don't think he is particularly fond of reading much either. It'd have to be a very concise guide.
What can you read in weeks that would give you the basics? I mean, specific sources. There is too much information out there.
And what do you recommend that the OP read? He probably doesn't even know what a stock is. And given his level of education, I don't think he is particularly fond of reading much either. It'd have to be a very concise guide.
I actually listed two good basic guides in my first post in this thread.
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