Next Month is my 18th birthday,and ill be receving my 135K trust money.What should i do with it?

Question

Ive already pre-spent about 20k of it(car,clothes,ps3)


But if i keep spending like a moron ill be broke in no-time.My thing is that 135k is not chump change.And I want to know away to have that money make me more money?

Answer 1

You need to have a goal for the money. The remaining money I suggest you put in a temporary 6 month CD so you can't touch it, while you educate yourself.

I suggest you read, read, read and read some more. Then you need to interview financial advisers that will explain things to you and talk to you as an adult not as "trust me."

This is what I suggest you read:

The Total Money Makeover by Ramsey (gives you investing ideas, why not to use debt, how to interview a financial counselor, etc.)
The Millionaire Next Door by Stanley (how to become a millionaire next door and characteristics of self made millionaires)
Your Money Counts by Dayton (another look at staying out of debt, how to make good decisions with money, etc)

Happy Birthday and good luck!

Answer 2

If you want to be financially secure, the steps are the same for everyone--you just have a nice big head start. So take advantage of it!

1. For now, leave it invested in whatever it's already invested in. When you start moving it around you pay capital gains taxes and plus you are tempted to spend it.

2. Get a good degree in something you love--as well as something that will earn you a decent living. DO NOT TOUCH THIS MONEY WHILE YOU ARE IN COLLEGE. If you need this money to pay for college, only withdraw money once a semester for tuition and a modest "allowance." Remember that if you want to get any kind of graduate degree, you might need the entire trust just for education expenses. So make sure it lasts!

Exception: if at any point during college you have earned income, open a Roth IRA and transfer the max you are allowed from the trust to the Roth.

2. Establish good credit. Get a credit card, use it, but pay it off each month. Simultaneously educate yourself about wealth management and personal finance. Read books, browse the internet, get a subscription to Money Magazine, etc.

3. Graduate from college and get a good job. Now that you are educated and know all about financial planning, you can start organizing your financial life. Take what's left in the trust and set it up as follows:
A. Put 6 months living expenses in cash for emergencies/unexpected expenses.
B. Buy a home. You should now have good credit and a decent income. Put 20% down, but no more.
C. Transfer the max you are allowed from the trust to a Roth IRA every year.
D. Keep the rest in a balanced mix of cash, bonds, and stocks for longer term goals.
E. Don't rely on this money! Pretend it's not there until you need it for a wedding or some other important distant event. Contribute to your 401k and add to your emergency fund and/or other investments every month no matter what.

Answer 3

I think MLDjay has it about right. You should absolutely put it in a 6 month or 12 month CD and i will tell you why.

The most important thing is that you get it out of your hands and resist the temptation to spend it. For this a CD is better than a money market or savings account because it will be harder to withdraw.

Job #1- get the money out or reach


Less important for the next year or so is your rate of return.

All the advice about asset allocation is well intended but likely to be overwhelming. Trying to decide what or which investment now is liely to cause more stress and in the end, may result is unintended consequences, like avoiding the decison and slowly spending the money.

GET THE MONEY OUT of your hands. If the only thing you do is continually roll it over in Cd's that is still a prudent investment strategy. No one ever lost money in a savings account, plenty (many) have lost money in the market.

I also like the idea that you should learn about different investments while the money is on ice, and would only add this.....in addition to books, when it rolls over in 6 months, perhaps take $5,000 and open an investment account and use this money to play the market, learn and watch....reading is very good but only by doing and making mistakes will you learn.

As your confidence builds, and only if you so choose, you can slowly and systematically reduce $$ from the CD's and put it in the market.

Good luck!

Answer 4

You have an opportunity that most people never have - don't blow it. You've already gone through $20M, so carefully plan the rest. The first thing to do is to put it in an on-line bank money market account, like ING or Emigrant Bank. You'll get about a 5% annualized return and it'll remain totally liquid, so that you can pull it out anytime without penalty. Then, get some help with some research on how to wisely invest some of this, i.e., diversifying while managing the risk so that you can get better than a 5% return without a big possiblity of losing a lot of principal. Take at least a few weeks, if not a few months, to get a really good idea of what you're doing.

At 18, I'd advise going to school and concentrate on getting an undergraduate degree. If you don't know what to study, then major in business until you find something else that piques your interest. After you've graduated, reward yourself with a trip abroad (but travel cheap using youth hostels - you'll meet more people and have more fun than staying in expensive hotels). Then, get a good job that you can stay at for at least a couple of years.

Only after two years at the job would I then suggest using a good part of the money for a sizeable down payment on a home. I think, in the long run, this will bring you a lot more satisfaction than wasting the money on "stuff" and waking up one day wondering where it all went to. Good luck.

Answer 5

Are you going to college? Is it already paid for? If not that's the first place I'd spend it.

If that's not one of your concerns I'd plop it into a low-fee Index Fund or Mutual Fund. If you need help figureing out how to do that... ask another question :)

Assuming you make 10% per year and put $100k into a mutual fund, then it turns into:

10 years -> $260k would be a nice down-payment on a house.
32 years (when you're 50) -> just over $2,100,000. That's correct... Two-point-one-million.

I did something similar to the above with an inheritance and quite frankly it was tough to *not* spend the money right away. I spent some of it like you already have, and invested the rest. After a few months you don't forget you have the money, but you no longer miss not spending it. 8 years later my money is still invested and I've never been happier with any financial decision I've ever made. Hopefully you'll do the same.

Answer 6

Congratulations, not only on receiving the money but also realizing that you need to invest the money wisely for yourself in the future.

First, like someone else suggested, I'd advise you to invest in YOURSELF. By that, I mean go to college and get a marketable degree in something like Engineering or Business, but NOT Psychology, Philosophy, or English. While I have plenty of respect for people with degrees in those last three fields, they're just not marketable and will likely not provide you with a stable, well-paid job in the future.

Next, I'd advise you to seek a financial advisor. They will help you invest wisely. They'll talk about YOUR financial goals for the future and help you accomplish those with proper asset allocation.

If you don't want to go through a financial advisor, I'd advise you to open a Roth IRA and put the maximum amount in there for the year, which I think is now $5,000.

In addition, invest in some no-load mutual funds. You're super young so you want to be really aggressive. Your investment allocation should look something like this:
Small-cap: 35%
Mid-cap: 35%
Large-cap: 15%
International: 15%

Once you get older, you can start to move those funds to the large cap funds and then eventually fixed-income funds.

Answer 7

You need a financial adviser to help you invest wisely. Ask the lawyer who is handling the trust (or someone else you trust) or your accountant to recommend someone. You can spend some of the money, but you are right, if you spend it like a moron it will be gone in no time. If you invest wisely it will bring you more income.

Answer 8

Since you already went shopping the wrong way (before you had the money) You need to have this rolled over into an IRA so you cannot touch it.

Of course you will need to take out the $20,000 to pay for the stuff you already bought AND you will need extra for taxes now since that $20,000 will be income and you WILL BE taxed on it. Too bad you didn't post this question BEFORE you went shopping. Pity !!

: ) HAPPY BIRTHDAY !!

Answer 9

It relies upon on how a lot funds you're making and who lives on your loved ones. in case you and your son stay consisting of your mothers and fathers or some thing their earnings will be considered as well as yours.

Answer 10

One thing would be to put it in an Ing. Account which is a savings acccount which has a high interest rate and also you should buy stocks.