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I just inherited $300K

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Never thought it would be anything close to this amount, but I consider myself extremely blessed to have just inherited $300K.  

I'm a young guy, single, college graduate.  Looking to buy a home in the next year or two.  In the process of switching jobs so that's why I'm holding off.  I also live in California where real estate is obscenely expensive so I'm debating whether or not to move out of state. Additionally, I have no retirement account of any kind set up yet.  

What should I do with the $300K right now?

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It is possible, but you need multiple employers and generous employer contributions. While the elective deferral limit i... (more)

stanolshefski (Aug. 28, 2017 @ 9:01a) |

You may have misunderstood the objective.  The main advantage of donating at once is that your life is simpler as you do... (more)

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That's interesting. Thanks for the info!

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rated:
Congratulations! Now send it my way

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1. What debt do you have?
2. What kind of savings do you have?
3. What kind of job ($$) do you have? Helps put $300k in perspective
4. If you've been working for some time, why NO retirement accounts of any kind??

First venture without any info, you should keep it in a safe place until you're able to make a full evaluation and strategy...

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snaggletoothed said:    Additionally, I have no retirement account of any kind set up yet. 
  Why is that? Do you have a retirement plan at work? Does the employer provide a match? How old are you?
At a minimum, max out your IRA and possibly your 401k with this 300k.
ETA: Just so you know, you cannot directly put part of the 300k into a 401k. It should be through employer (payroll deduction). To the extent that your paycheck is lower, you can use the 300k to supplement your paycheck for living expenses.

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snaggletoothed said:   Looking to buy a home in the next year or two.
  WHY????????

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dumroo said:   Congratulations! Now send it my way
  I was also going to tell him to give it to me, but you beat me to it.

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DigiornosHunter said:   1. What debt do you have?
2. What kind of savings do you have?
3. What kind of job ($$) do you have? Helps put $300k in perspective
4. If you've been working for some time, why NO retirement accounts of any kind??

First venture without any info, you should keep it in a safe place until you're able to make a full evaluation and strategy...

  
Zero debt.  Credit score ranges 810-830. 

Savings, about $25K.

Age 34. 

I have a Business Economics degree.

After college I became self-employed (transportation sector) in part because of some health problems that are now behind me.  I'm now transitioning into traditional employment.  That's why I never established any sort of retirement account -- the medical expenses ate away at most of my spare cash.

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Pay off any expensive (>4% or variable) debt now.
Use the rest to start a retirement & emergency savings account (start maxing out Roth IRA).
Don't buy a house in California.
Pretend you don't have the money. Invest at a level of risk you're comfortable with.

Moving away from CA is a different discussion. That depends on what kind of career you're starting and what your trajectory looks like. I would bet that you could find better value doing the same kind of work you're doing somewhere else unless you're a hot shot engineer.

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DTASFAB said:   
snaggletoothed said:   Looking to buy a home in the next year or two.
  WHY????????

 
Por que?

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Dont let anyone in the friends/family circle know about the 300k inheritance other than those already in the know.
Dont inflate your lifestyle, and dont show any outward sign of having inherited a large sum of money.

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wpgabriel said:   Pay off any expensive (>4% or variable) debt now.
Use the rest to start a retirement & emergency savings account (start maxing out Roth IRA).
Don't buy a house in California.
Pretend you don't have the money. Invest at a level of risk you're comfortable with.

Moving away from CA is a different discussion. That depends on what kind of career you're starting and what your trajectory looks like. I would bet that you could find better value doing the same kind of work you're doing somewhere else unless you're a hot shot engineer.

  
I would like to leave California to some place cheaper.  Two things are holding me back right now: my parents' marginal health and very few relatives left in California.  Once the latter are gone, I'm not sure who will look after my folks unless it's me.  

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fwuser12 said:   Dont let anyone in the friends/family circle know about the 300k inheritance other than those already in the know.
Dont inflate your lifestyle, and dont show any outward sign of having inherited a large sum of money.

  
Good advice.  In high school I was voted "least likely to succumb to peer pressure" so no worries there.  LOL

I'm very frugal and not trendy at all.  I don't like spending money on myself unless totally necesary.  

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Congrats!  In many states you could buy a beautiful mansion with that kind of money, sitting up high on a really pretty piece of land between fifty and one hundred acres, with beautiful woods having abundant, enjoyable wildlife.

In California, depending exactly where, that windfall should still be enough to buy you a reasonably decent two car garage, with possibly a room or two up top with running water where you could exist.  Land?  LMAO

Enjoy!

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34 and no retirement account? C'mon man.

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NewGuy said:   34 and no retirement account? C'mon man.
  
I know it's bad, but as explained above, I had several years of health problems that drained me of cash.  

Didn't want to go into debt, so I paid those off with nothing left over for retirement.  

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snaggletoothed said:   I would like to leave California to some place cheaper.  Two things are holding me back right now: my parents' marginal health and very few relatives left in California.  Once the latter are gone, I'm not sure who will look after my folks unless it's me.  
If it won't be a terribly long time, can you live with your parents until you aren't able to care for them any longer? What are you looking to do for a living now that your health and finances are back on track? You can probably get some good suggestions here for the best places to move for various careers.

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Put at least half into your retirement account where you won't be tempted to drain. You're 34 and a good 8-10 years behind on your retirement savings. Start the snow ball early has a greater chance of growing. If you are still single and no kids you should avoid buying a house. If you are married and planning children buy a home that matches your pay and not combined income. Prepare for the day the wife wants to stay home from work and raise kids, if she continues it will be a huge bonus.

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wpgabriel said:   
snaggletoothed said:   I would like to leave California to some place cheaper.  Two things are holding me back right now: my parents' marginal health and very few relatives left in California.  Once the latter are gone, I'm not sure who will look after my folks unless it's me.  
If it won't be a terribly long time, can you live with your parents until you aren't able to care for them any longer? What are you looking to do for a living now that your health and finances are back on track? You can probably get some good suggestions here for the best places to move for various careers.

  
My parents' health isn't that poor yet, but another five or ten years will likely be a different story.  I wouldn't mind moving to a place like Texas but I don't want to be the closest relative living 1,500 miles away.  That could easily be the case a decade from now.

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letsspendlotsofmoney said:   Put at least half into your retirement account where you won't be tempted to drain. You're 34 and a good 8-10 years behind on your retirement savings. Start the snow ball early has a greater chance of growing. If you are still single and no kids you should avoid buying a house. If you are married and planning children buy a home that matches your pay and not combined income. Prepare for the day the wife wants to stay home from work and raise kids, if she continues it will be a huge bonus.
  
1.  Since I have no retirement account yet, what option should I choose?
2.  Why should I avoid buying a home?

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congrats!
how much is left over after fed  + state taxes?

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yurgreat said:   congrats!
how much is left over after fed  + state taxes?

  
OP should not owe any tax on an inheritance.

 

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yurgreat said:   congrats!
how much is left over after fed  + state taxes?

  
I'm told all of it.  

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If you're looking to move, move. Don't stick around because of something that may or may not happen between 5 and 25 years from now.
If for some reason you HAVE to come back, you can come back.
Or you can save some of the 300k as a "future travel" budget if you find yourself in a need to travel back to CA a lot.

Also consider rental properties

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Did that Nigerian prince get in touch with you yet?

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snaggletoothed said:   
letsspendlotsofmoney said:   Put at least half into your retirement account where you won't be tempted to drain. You're 34 and a good 8-10 years behind on your retirement savings. Start the snow ball early has a greater chance of growing. If you are still single and no kids you should avoid buying a house. If you are married and planning children buy a home that matches your pay and not combined income. Prepare for the day the wife wants to stay home from work and raise kids, if she continues it will be a huge bonus.
  
1.  Since I have no retirement account yet, what option should I choose?
2.  Why should I avoid buying a home?

  2. Avoid buying a home, you may want to move in the next 5 years as mentioned and 6% real estate commission comes right of the top, 200K = 12k commission if the home doesn't appreciate much the only one making money will be your realtor. 

1. Where to put your retirement funds? Roth, IRA, or they talk about here "backdoor roth" I have only 401k and IRA. Others here will be able to tell you better where to put it. 

My western union ID is "Give Me Money" if you are inclined to send some. 

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I'd max out retirement contributions(401K, IRA, Roth IRA, etc).
Wait until real estate corrects before buying.
Don't loan any money to friends/family.
Don't invest a large part of it to buy a business.

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You should probably start by funding your retirement account a traditional IRA or Roth and start contributing to a 401k Plan at work.

If you plan on buying a house within 1-2 years you probably should put the rest into a high yielding MMA/savings account....with the market near all time highs don't think you near-term plans can afford any near-term correction...a 10% correction can wipe out $30k of the $300k easily which may take longer to recover.

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Start with an emergency fund. While most people say six months expenses, you can and should set aside a full year's expenses based on your previous problems and the type of work you are currently doing.

Start long term investing with index funds which spread the risk out over up to 500+ stocks. Bless you.

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I would diversify.

50% Bitcoin, 50% Tesla stock

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0.6 of a chick at the same time.

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I fully acknowledge the need to correct for not contributing toward retirement. So no argument there, I guess the question is how much?
Some people have said half, or $150K.

Emergency fund. I live extremely frugal so $25K could last me a full year if need be. (Plus I have another $25K already stashed away)

That leaves me with $125K. I'm going to need some time for soul searching to determine whether I make the smart choice (leave California) or stick around. Maybe six months to figure this out. What should I do with the $125K in the mean time? High yield MMA as suggested above?

I guess this is directed toward @RealEstateMatt but anyone can chime in. What do you see the real estate market doing in the next five years?

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Buy as many Powerball tickets and turn $300K to $700M (just kidding)

http://www.marketwatch.com/story/is-this-1-billion-scratch-card-...

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snaggletoothed said:   I fully acknowledge the need to correct for not contributing toward retirement. So no argument there, I guess the question is how much?
Some people have said half, or $150K.
 

  You cannot really put a large amount into a retirement account in one shot. As a salaried person, the two main avenues are an IRA (Roth or traditional), and a 401k.
The former is a max. of 5.5k and the latter has a max of 18k, both per year. Your employer must offer a 401k plan for you to be able to participate. (if you work for a non-profit, it maybe called a 403b but the limit is the same).

Sometimes you may have access to a 457 (deferred compensation plan). Unless you work for a government agency, I would be careful about contributing to a 457 plan.

In short you cannot put 150k directly into a retirement plan in one shot.

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snaggletoothed said:   
wpgabriel said:   
snaggletoothed said:   I would like to leave California to some place cheaper.  Two things are holding me back right now: my parents' marginal health and very few relatives left in California.  Once the latter are gone, I'm not sure who will look after my folks unless it's me.  
If it won't be a terribly long time, can you live with your parents until you aren't able to care for them any longer? What are you looking to do for a living now that your health and finances are back on track? You can probably get some good suggestions here for the best places to move for various careers.

  
My parents' health isn't that poor yet, but another five or ten years will likely be a different story.  I wouldn't mind moving to a place like Texas but I don't want to be the closest relative living 1,500 miles away.  That could easily be the case a decade from now.

  
welcome to austin

you can still buy a decent home here starting at 200k (e.g. look zillow zip code 78717)

home of many IT companies as well as govt jobs
major employers Dell, general motors, HP, AMD, Samsung, visa, HomeAway, tons of start ups

business degree may help you entry in IT space, you can be a business analyst or requirement analyst for example
 

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Can't believe no one has suggested it?

H & B!!!

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Dividend growth stocks.

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Dump the balance into a high-yielding junk bond ETF like JNK or SJNK. SJNK will cost you 100bps in yield vs JNK but far less volatile. Enjoy your monthly dividends from it while you figure out what to do.

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What would you have done, had you not gotten the $300k? Ok, do that.

For the $300k, max all retirement options - there aren't that many options at that income level. The $300k if lump sum, pushes you over ira and Roth IRA, though you could do a backdoor roth for $5500. That's it, unless your work has 401k which is another $18k. Now the rest will go in a taxable investment account. See bogleheads wiki for tax efficient placement advice. 25k is plenty for efund, no need for anymore.

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thats 300k the dead guy didnt get to use up before he died... so h&b all the way!

Skipping 104 Messages...
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stanolshefski said:   
i3ighead said:   
Dus10 said:   
superdrew said:   https://investor.vanguard.com/what-we-offer/small-business/individual-401k?lang=en 

Since you are a sole proprietor you should be able to contribute 25% of your income on the company side up to 53k and 18k on your side to a 401k. This will shield the 25% from taxes plus the 18k..

Putting $71k into a 401k in just one year... sounds horrible unless you are in the top 2 tax brackets.

EDIT: And I mean horrible from the lifestyle standpoint.  The point of having some money and working should be to get some enjoyment out of it.  If you are socking away that much into retirement, you should at least be in a position to enjoy some of the fruits of your labor during the same year.

  

I dont think you can put in $71k. The max is $53k for the younger folks. 

  It is possible, but you need multiple employers and generous employer contributions. While the elective deferral limit is across all employers, the $53K is actually PER employer.

  That's interesting. Thanks for the info!

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