Coming in to a good amount of money. What's the best way to handle it?

Question

My girlfriend was in a life threating car accident a few years ago which put her in a halo for 6 months. She had the same injury as Christopher Reeves, but luckily is still alive and has full function of her body.

2 years later, the insurance companies finally settled and a large amount of money is coming to her. We've thought about real-estate, renting section 8, starting businesses, investing.... Her dad wants her to put it into an IRA, but another car accident could kill her and she doesn't want to not be able to use the money for something she can enjoy.

So, What's the best way to handle a large sum of money?

Answer 1

THE MOST IMPORTANT THING YOU CAN DO!
You must make an appointment with a CFP(certified financial planner). As I mention below, their job is NOT to sell you investments, but to talk to you about how and where to invest your money based on your income, age, disabillity etc.

now for my advise that you sould also do:

If you are 25 today and you retire at 67 with a million dollar investment portfolio, that will safely generate $60K/year. But when you are 67, that 60K will only have the buying power of a little over $16K/year. It gets worse though, because at 67, you will still probably have 30 more years to live and that 16K will shrink each year until it’s only worth $8K/year at age 90.

A million dollars isn’t what it used to be… and it will be even less in the future.

So…. We must all become educated investors much more so then our parents were and start sooner. These are some basic steps to get you started. You’ve got to jump in now.


Step 1.
First decide what kind of brokerage you want to work with. You can open a brokerage account in your bank, with a large full service brokerage or an internet brokerage. I find when I get help, most people want to sell me things that are better for them…. So I use http://www.scottrade.com because it’s cheap and easy with low frills. I like their streaming quotes and I do my own research and make my own investments. But any low cost internet brokerage service is fine.

Step 2. get a subscription to Barrons or Investors Business Daily… Do this for 6 months or a year. At first, It seems a bit mysterious, but pretty soon you start to understand the terms and things that investors are looking for and what they are afraid of

Step 3. If you have some money to invest, put it in 3 month CD’s right now. First the market is unstable and second you have some homework in Step 4 to do before you do any investing.

Step 4. Go out to the internet and search on the following subjects. Become very familiar with the concepts.
Asset allocation
Long term investing
inflation
Roth ira vs ira
Large med small cap
Value vs growth
Indexed mutual funds
No load mutual funds
ETF
Sector funds
Bonds CD preferred stock
dividends
International funds
Market cycles
volatility
Fundamental analysis
Technical analysis
In most cases, I think it is wise to use indexed mutual funds and ETF to build the base of your portfolio.

Step 5 go to http://clearstation.etrade.com/ and sign up for a free account. Play around there by looking at graphs and fundamentals. If you click on the graph names, you will get clear information about what the graph is based on and how to interpret it. I think it’s also a good idea to pretend you have $10,000 and start buying and selling on paper. Keep track of where you are each day for a month… It’s a lot easier to lose play money then real money….
WARNING: don’t rely on technical analysis alone. These graphs are good at telling you WHEN to buy and sell, but now WHAT to buy.

Step 6. It’s always a good Idea to see a CFP (certified financial planner). Their job is to work for your benefit, not to sell you investments. They can cover subjects like employee benefits, insurance, budgeting, living trusts, 401k, taxes and real estate as well as investment types and investment types to keep away from.

Always strive to do your own research… you’ll find everyone sounds like an expert so take everything people tell you with a grain of salt. It’s not easy in the beginning but soon you will be the expert.

Don’t get involved with futures, currency, options (unless you get stock options at work), commodities, annuities or other derivative type investments at this time.


Good Luck

Answer 2

Did you consider the number of unemployed persons in this nation when you applied the "should not eat" thing. There are many reasons that persons do not work and the should not eat had not considered them. There is no magic bullet to sound counsel and rightly dividing the word of truth. There are many organizations that do less with your donation than what a smoker may do with your donation or an alcoholic. This indicates that a person has more than one problem. Are you suggesting that the homeless that receive donations should be clean, sober and not smokers? However you got that dollar, you didn't have to qualify to receive it. This is dangerous thinking and it would be better to not give ever than to pass this kind of judgment with a donation. Whatever is done with a donation is not a concern. The concern is whether you are giving it for the right reason.

Answer 3

First and foremost, she should pay off any debt. If she wants to be able to use it on something she can enjoy, she could use it to buy a house, which would also be an investment. There are so many investment options out there, which would allow her to make interest on the money. If she doesn't want it tied up in an IRA, there are CD's, mutual funds, etc. My husband and I simply put money in a special kind of checking account that has a higher interest rate but has limits on how little you can withdraw/deposit at one time and how many times you can withdraw a month.

Answer 4

Most are very good answers.
just my 2 cents:

1st) pay off debt

2nd) put in simple savings like emigrant direct or ing (best rates, 5% or better for now) for at least 6 months, a year would be better while SHE thinks about it, AFTER she has the money, before she has it is all conjecture. And stay debt free during the "cooling off period".

3rd) then do the other suggestions about diversity, and real estate and multiple investments, and a "small" amount of fun.

Answer 5

I would for sure look at real esate. Im assuming that the USA is also a good hot market in property. I was always told by my Dad land will always be in demand. sooner or later your investment will pay off.
I am 50 years old , first husband died after 28 years , now Im married again only 2 months, and he has been diagnosed with cancer. Too bad I never listened to my Dad . never had the cash to invest , lost my house when my first husband died and now my new wonderful husband is not well and we are barely making it. so please watch what you do in life and if you can ensure a good future then please consider it. Im in Canada , wish I could dig up some cash to purchase instead of rent. wasting what little we have on rent and before I know it , it willbe too late again for us.
please look at your options. Please give my regards to your girlfreind , hope she remains well.

Answer 6

Well my husband and i got a large amount of money not to long ago,first thing we did was buy a house outright, bought a van(we had only 1 car) bought new furniture,spent a chunk of money on ourselves then we went to the bank and invested in stock's,put some in bond's but still kept some for our personal use.Don't seem like much but it's great owning a home and car's that are paid in full with no one to answer to but us. Good Luck.

Answer 7

Pay off debt! I would then buy a home (this is a good investment= equity) and then start an rothIRA for myself or an educational IRA for my future kids- maybe use a little bit to go on a nice vacation too. Saving is key- talk with an advisor who can teach you how to make your money grow. If you don't have money for a consultant try calling up that lady on TV one night... Suze Orman!

Answer 8

First of all don't advertise the fact on yahoo. Also, don't suddenly make anynusually large purchases that could raise red flags. Remember that the settlement is for her present and future security and comfort. Unless you are married you should have no say.

Any impartial financial advisor who is not selling their products or investments can be helpful. We used one when my husband retired and they charged an hourly fee but told us upfront about how long it would take. That advisor should ask about long term
goals and then make recommendations which she can or cannot accept. They advisor should your girlfriend's best interest of prime importance. They should not be working on a commission basis. There are many professionals available, so be sure to check their credentials and references. Good luck. Glad to hear your girlfirend continues her progress


















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Answer 9

(1) Don't tell a lot of people that you've got good amount of money coming in.

(2) General rule of thumb, for every dollar you spend, you should save $2, invest $2.

(3) Don't save and invest in one company alone. As they say, don't put all your eggs in one basket, spread them around.

(4) If you're a high-risk investor, save more just in case...

Answer 10

talk to an accountant tell him how much she has coming in and what you want out of life he should be able to guide you in the right direction I know she wants to enjoy it now just in case she dies but think about this what if she lives to be 90 talk to some senior citizens who are living on just their SSI