I'm a trustafarian

[turnipmonster]

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I live in Seattle so I think buying property is out to begin with.

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why? it's plenty for a very hefty down payment and to help out on your mortgage payments.

--turnipmonster

[The Armchair]

If you have 100k, you can get real estate almost anywhere.

[StevieG]

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So as it turns out I'm coming into about 100k in august. This is obviously not a life changinging ammount of money, it is however about four years salary for me.

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Four years of salary is life changing. You will be able to give life long financial goals a big boost with this money.

Pay off any and all debt. Credit cards, car payments, whatever.

Make the maximum contribution you can to retirement funds. For a Roth IRA, you can contribute $3000 this year, but you have until April 15 to make last year's $3000 contribution. If you are over a certain age (50?) you can also make a catch up contribution of an extra $500. Do you have a 401k plan available? You can contribute a max of $13000 in a year, so max it starting in the summer, use the windfall to help live for the rest of the year.

Have kids? Contribute to a 529 college savings plan. Use a calculator like this one to see what a big impact even just a lump sum now can make.

[edtost]

the stock market forum is home to perhaps the stupidest group of 2+2 posters imaginable.

[Shajen]

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the stock market forum is home to perhaps the stupidest group of 2+2 posters imaginable.

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This is true. However, he *could* get some decent advice there.

[bdk3clash]

I would think it would be prudent to contribute to your 401k only up to the point where you max out the matching funds your employer provides, if any. Otherwise, putting the same money into a Roth IRA probably makes more sense.

[DavidC]

Keep your expenses low, live off the money, and learn to play poker such that you can make more than 25k/a? Do same, but go to university?

I don't think that investing this money is going to be of great benefit to you, as you won't be able to live off the interest, and $25k/a isn't a ton of money, even if you get "bonus interest" on your 100k.

As far as what to do with the money that you're not spending...

Because this is something that you're probably going to want to draw on in the near future, keep it in safe, predictable investments. Things like GICs are good. It doesn't even matter if they don't beat inflation. All that matters is that the money is still there when you want to withdraw it.

Keep in mind that the difference between an investment at 10% and an investment at 3% is only $7000 on 100k, but that you're guaranteed to have that money there.

I'm Canadian, so a Canada Savings Bond would be my first investment choice. I'm not sure what you have equivalent to that in the states, I think T-Bills...

An important thing to remember, if you're going to go to an investment professional about this, is that they make commissions based on what they sell you and on how often they make transactions with your money. They're going to want to "churn" your assets such that their % commission increases (1% if they make one purchase, 3% if they make a purchase, make a sale, and repurchase something else). Additionally, they're going to want to promote products that their company sells, rather than the best in the field.

I think I speak for all of us when I say that I wish I had your dilema (not considering how you came into the money).

Take care, and good luck dealing with the cash.

Just don't spend it all on coke or something. [img]/images/graemlins/smile.gif[/img]

Edit: The other posts about reducing debt are good, and probably about buying property (though I don't know a damn thing about that). However, keep in mind that property fluctuates in value and is not liquid, so if you don't know where you want to live, I think my advice still stands, so that you DO have the cash when you want to buy property.

[bisonbison]

This is obviously not a life changinging ammount of money != it is however about four years salary for me

It is a life-changing amount.

You're not in debt, so find a financial advisor. Figure out some 5/10/25 year goals. Invest accordingingly.

[gvibes]

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Keep in mind that the difference between an investment at 10% and an investment at 3% is only $7000 on 100k, but that you're guaranteed to have that money there.

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100k after 40 years at 10% = 4.5M
100k after 40 years at 3% = 325,000

Food for thought.

EDIT: And I agree that a lot of financial planners are thiefs in a shirt and tie.

[DavidC]

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Keep in mind that the difference between an investment at 10% and an investment at 3% is only $7000 on 100k, but that you're guaranteed to have that money there.

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100k after 40 years at 10% = 4.5M
100k after 40 years at 3% = 325,000


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I know.

Keep in mind a few things though... it's tough to tell how much 4.5 million will be worth in 40 years. It's also tough to say that you'll get 10% cumulative over 40 years.

The other thing is that life isn't about huge amounts of money (if it were, he wouldn't have asked the question, he'd have just put the money into the stock market, right?). He may want to use the money for something relatively soon. That's the key.

If someone had posed me with this question a few years ago I probably would have had your same answer: Pick up The Warren Buffet Way, The Intelligent Investor, Security Analysis, Common Stocks and Uncommon Profits... take some time off work and make a decision about how to invest it.

However... right now I may be more inclined to tell him to do some travelling in 3rd world countries or something like that, where the money goes a long ways and there's a ton of things to experience, other than just sitting on a beach.

I'm not a financial moron, just so you know. I'm poker moron. Quite the difference. [img]/images/graemlins/smile.gif[/img]