I just inherited about $50000. In my last question people told me to put a down payment on a house.?

Question

I have $50000 and I need some advice on what to do with it. I am spending more money on rent and living expenses than I make at my job. I can't get a mortage so buying a house is out. I have friend that is a financial adviser ans she wants me to invest. Right now I have the money in a ultra money market account. I am getting the most interest I can get. She is telling me she can get more of a return for me with some simple investments. I am afraid if I don't do something soon the money is going to get spent on just my cost of living expenses. But I have sister that is telling me that if I invest my money I will wind up losing it anyway. She seems to think that the financial adviser is only out for a commision. Right now I am getting a few hundred a month on the money. I am hoping by investing I will get more back a month and this will help me with my bills . The financial adviser gave a an example of a safe and simple investment.

Stock in GE, she said I could get much more money.

Answer 1

ok first have you figure how this will affect next years taxes -- do that and put that money aside

next the most the money will bring in hard money is 5000 a year which is only a little over 400 an month before taxes -- again figure out how it is going to affect your taxes

so now that we have some ground rules here is what i would do == you are very very poor money manager if before this money drop out of the sky you have more outgo than income-- take most of the money and pay off the bills and reduce your out go!! now remember just because you do not have cc or other bills you do not have a fall back position if you go out and charge a bunch of junk on cc!!! if they were any thing left i would put 6 months of expenses in a rainy day fund -- and if they were still any thing left i would put it in a growth income mutual fund!!!

Answer 2

Depending on where you live, if you have a steady job and have $30,000 to put down on a small house you can get a mortgage. But there is a lot to consider as how much rent you are now paying, how long you would live there and the local housing market. It could be the best investment you can make while cutting down on your expenses. or it could lose you money. Also have to take maintenance into account. If you could buy a place with a rentable space in it you could be in really good shape - if you want to deal with being a landlord.

So, it's hard to say what you should do because so much depends on so many variables plus most importantly, what YOU want to deal with interms of risks.

The best thing is that you are concerned about burning up this gift and looking into option.

First thing is I'd look into why you are spending more than you are earning right now. Maybe the $50,000 or part of it would be best spent on helping you get training to get a better higher earning career. Just another option to think about.

Answer 3

One important thing to bear in mind when deciding what to do with "found" money is to consider how old you are, The older you are the more conservative you should be with your investments.

That being said you should definitely speak to a financial expert that DOES NOT WANT TO SELL YOU ANYTHING & IS NOT A FRIEND. My girlfriend, who is just out of school with some debt and making pretty good money, paid about $80 to speak to someone (in her case it was the person who does her taxes) and it really helped her figure things out.

Why can't you get a mortgage? If it's because your credit is shot then you should probably use some of the money to fix your credit so you can in the future. If it's because you don't make enough money then (depending on your age) you might consider going back to school with some of the money as a degree (or better degree) will almost certainly help your earning power.

Whatever you do, do NOT invest in anything without speaking to a professional who can be trusted to give good advice.

By the way, no good financial adviser would tell you to put all your money in one stock on matter how safe it seems. How to invest is something you need to talk to a pro about who does not know you personally.

Good luck. This is a problem most of us wish we had.

Answer 4

I defiantly would not recommend putting it all in a single stock, you would want to place it in a mutual fund.

You may want to look into either reducing your rent and living expenses, or getting a better job.

Even if your investment returns 10% above inflation, which is very unlikely, this will only return 5000 per year. Due to volatility, some years it will not produce any extra, and you will need to withdraw principle.

Investing the money in education may make sense so you can get a higher paying job which will pay off more in the long run.

Keeping the money in an easily accessible place will only serve to help you spend it faster since you know you can fall back on it and may make purchases you otherwise would not have made.

Answer 5

Up front there is no financial adviser that will PROMISE you that they will make you money. They work on commission and there are some that aren't real bright. I rolled my 401K into a bank that has ponies and a stage coach in front of it and their whiz kid has made me about 2% in the 20 years I've had it in there. I also invested a sum 50% less with Fidelity, ten years later and that's worth a little more the the first.
I would split the money into 10 equal parts and buy a cd for 6 months, 12 months, 18, months and so on up to five years. You will have a CD being avalible every 6 months that way. If you don't need it you change it into a 5 year cd, and you always have one every six months.

Answer 6

I think the Money Market is a great idea, but do you need access to the money? A Money Market is really just a checking account that earns interest like a savings account. If you don't need access to the money, shop around for CDs, for that amount, don't settle for less than 5% interest. With most banks, you can opt to have the interest deposited to your checking or savings rather than back into the CD. You may be able to take $25000 and use that as a down payment, it's quite possible that your mortgage payments would be less than your rent.

Answer 7

I would split the money and invest it many ways. Don't just believe this oh, you will get much more if you put it here, believe me - if you listen to her, will she pay it back if you lose it? 50 is a lot so you can do a lot to it too. If you don't know how to buy stocks, start a little and experiment - this is the best time to know how it is. You will lose the money anyway because money doesn't stay long it meant to be spent and use - although you have to use it wisely because it is also hard to find.

Answer 8

I would sure like to know where I could get a good house in a good area with only a $50k down payment.

Ask your adviser about no-load mutual funds. He won't get any commission out of that. Municipal bonds are something to consider too as the interest paid is tax free. The money you're getting right now is going to be taxed, and since your savings accounts don't have withholding, you're going to have to pony up the $$ to the IRS.

My free advice, and you get what you pay for, is to pay down or off some of your debts to more affordable levels and then invest the rest in some good mutual funds. There are several out there, Oppenheimer, Fidelity, Legend Franklin and more. You will only pay taxes on the money when you withdraw it unless, as I said, you buy a municipal bond fund, then you will owe the IRS nothing.

You don't have to worry about inheritance taxes. You have to inherit more than $600,000 for that to kick in.

Answer 9

Step 1: Leave the month where it is for now. DON'T make any major decisions yet.
Step 2: You need to increase your income or cut your spending. If you are digging your self a hole every month, the $50,000 MAY file the hole, but it won't stop you from digging.
Step 3. Can you pay off debts with the $50,000. This could help cut you monthly payments.

Answer 10

YES INVEST if u cant afford to pay rent and living expenses, then u should put the money in a bank or do wat your friend said. stocks are ok but bad things may happen so take it easy on that. try not to buy to many unnessary things. you dont want to end up as a hobo. well i hope u do well in the future.