 |
|
22 years old and just inherited $20,000
01-28-2016, 11:40 AM
|
#1
|
|
Recycles dryer sheets
Join Date: Mar 2013
Posts: 106
|
22 years old and just inherited $20,000
A 22 year old (recent college graduate) comes up to you and tells you he just inherited $20,000 and asks you your advice on what to do with the money. He explains that he wants to invest it, but with the recent drops in the stock market, he is unsure if he should wait for a while to see what happens, put it in slowly (IE, $1,000/month) or just invest it all at once (ya know, since he is young  ). He doesn't want to mess with individual stocks and wants to only invest in either active or passive mutual funds.
What's your advice for him?
My advice is to put in $5k NOW into Vanguard S&P 500 index and DCA the rest in $1k increments monthly until it's gone.
Anyone else?
|
|
|
 |
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!
Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!
You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!
|
|
01-28-2016, 11:50 AM
|
#2
|
|
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Mar 2013
Location: Limerick
Posts: 5,655
|
I'd just say put 3/4 into the S&P500 fund all at once and put the rest into an online savings account for emergencies.
Sent from my iPhone using Early Retirement Forum
|
|
|
|
|
01-28-2016, 12:19 PM
|
#3
|
|
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Mar 2007
Posts: 14,328
|
Put it in some front loaded funds I recommend and pay me 1.5% wrap fee, for life.
|
|
|
|
|
01-28-2016, 01:07 PM
|
#4
|
|
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,366
|
Put $3k in a global equity fund like Vanguard Global Equity. A month later, add whatever you need to increase the balance to $5k. A month later, add whatever you need to increase the balance to $7k. A month later, add whatever you need to increase the balance to $9k. Repeat until the $20k is totally invested.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
|
|
|
|
01-28-2016, 01:08 PM
|
#5
|
|
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: May 2013
Location: Les Bois
Posts: 5,761
|
buy a used 04/05 STI
__________________
You can't be a retirement plan actuary without a retirement plan, otherwise you lose all credibility...
|
|
|
|
|
01-28-2016, 01:40 PM
|
#6
|
|
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Dec 2015
Location: Michigan
Posts: 5,003
|
First decide what the AA will be. If it is 100% equities, so be it. I like the Vanguard 500 Index. Put in $10K now and 2K/mo until its gone.
__________________
"The mountains are calling, and I must go." John Muir
|
|
|
|
|
01-28-2016, 02:17 PM
|
#7
|
|
Thinks s/he gets paid by the post
Join Date: Feb 2006
Location: Alexandria, Va
Posts: 1,053
|
Does he have any other investments? Set the AA, then go from there.
I'd probably DCA over a few months into an 80/20 AA. And maybe spend a few thousand? I mean, really - at 22, you can have a LITTLE fun too!
__________________
Two roads diverged in a wood, and I - I took the one less travelled by...
|
|
|
|
|
01-28-2016, 02:30 PM
|
#8
|
|
Full time employment: Posting here.
Join Date: Feb 2012
Posts: 648
|
He has a staggering 1.134% chance of being a millionaire if he sets it all on Black and lets it ride for 6 spins... getting to the point, I think the odds of a 22 year old not touching this money for the 40-ish years it'd take to grow to a million are far worse. 
|
|
|
|
|
01-28-2016, 02:36 PM
|
#9
|
|
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: May 2013
Location: Les Bois
Posts: 5,761
|
that's why he should get the STI - live a little, the stock 04/05 models are actually quite collectible now
__________________
You can't be a retirement plan actuary without a retirement plan, otherwise you lose all credibility...
|
|
|
|
|
01-28-2016, 02:51 PM
|
#10
|
|
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Apr 2003
Location: Hooverville
Posts: 22,983
|
 Quote:
Originally Posted by Big_Hitter
buy a used 04/05 STI
|
An STI? He can get those easily enough for free. It's trying to deal with them afterward that might cost him.
Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
|
|
|
|
|
01-28-2016, 11:59 PM
|
#11
|
|
Thinks s/he gets paid by the post
Join Date: May 2014
Location: Utrecht
Posts: 2,650
|
Depending on the temperament of the person in question either:
- Invest 100% in Vanguard VT right now, or ..
- Invest $1k per month in the next 20 months
If the person never invested before, definitely option #2. It's less optimal but emotionally more bearable.
|
|
|
|
|
01-29-2016, 04:30 AM
|
#12
|
|
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
|
I'm assuming he has no student loan debt?
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
|
|
|
|
|
01-29-2016, 05:05 AM
|
#13
|
|
Full time employment: Posting here.
Join Date: May 2007
Posts: 883
|
Quote:
Originally Posted by moneymaker
A 22 year old...just inherited $20,000...wants to invest it, but with the recent drops in the stock market, he is unsure if he should wait....
What's your advice for him?...
|
If he's worried about the short term in the stock market, then my advice is to stay out of the market. This college grad needs more education about volatility and the foolishness of trying to time the market. My advice: take some of the $20K and buy a book or two about how to invest for long term success.
__________________
"It is better to have a permanent income than to be fascinating". Oscar Wilde
|
|
|
|
22 years old and just inherited $20,000
|
01-29-2016, 10:07 AM
|
#14
|
|
Thinks s/he gets paid by the post
Join Date: Jun 2014
Posts: 1,069
|
22 years old and just inherited $20,000
If it was me, i would have needed some good suits, a reliable car, apartment security deposit, moving costs for new job.
Poof.
Sent from my iPhone using Early Retirement Forum
|
|
|
|
|
01-29-2016, 11:50 AM
|
#15
|
|
Recycles dryer sheets
Join Date: Aug 2013
Posts: 437
|
History tells us that DCA under performs lump sum investment 2/3 of the time.
|
|
|
|
|
01-29-2016, 12:07 PM
|
#16
|
|
Thinks s/he gets paid by the post
Join Date: Aug 2013
Posts: 1,660
|
Same thing he should do with all money going forward, 25% retirement, 25% savings (for stuff like houses and cars), and spend the rest.
Or something like that. Retirement should go 100% stocks in a Roth IRA.
|
|
|
|
|
01-29-2016, 02:33 PM
|
#17
|
|
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: May 2008
Location: No fixed abode
Posts: 8,765
|
Quote:
Originally Posted by haha
An STI? He can get those easily enough for free. It's trying to deal with them afterward that might cost him.
Ha
|
I thought that was an STD.
__________________
"Good judgment comes from experience. Experience comes from bad judgement." - Anonymous (not Will Rogers or Sam Clemens)
DW and I - FIREd at 50 (7/06), living off assets
|
|
|
|
|
01-29-2016, 03:08 PM
|
#18
|
|
Moderator
Join Date: Dec 2007
Location: Eastern WV Panhandle
Posts: 25,340
|
Set aside 1/3 for frivolous nonsense. He is, after all, 22. Put the rest in Vanguard S&P 500 or total U.S. stock market, some total global stock market (15%?) and maybe 10% total bond market.
Look at it once a year and rebalance. Done.
__________________
When I was a kid I wanted to be older. This is not what I expected.
|
|
|
|
|
01-29-2016, 04:12 PM
|
#19
|
|
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
|
Quote:
Originally Posted by jetpack
History tells us that DCA under performs lump sum investment 2/3 of the time.
|
I believe this, but that 1/3 of the time can be absolutely brutal. As in, lump sum in the summer of 2008. The odds say DCA underperforms, but it also protects you from an all-in investment at the worst possible time.
That DCA underperforms 2/3 of the time (I don't have the stats but for this purpose I'll take you at your word) doesn't say how badly it underperforms 2/3 of the time, or how much it overperforms the other 1/3 of the time.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
|
|
|
|
|
01-29-2016, 05:13 PM
|
#20
|
|
Thinks s/he gets paid by the post
Join Date: Feb 2014
Posts: 3,083
|
My advice, crap table - $20,000 on the Don't Pass line, and lay the odds.
|
|
|
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
|
| Thread Tools |
|
|
| Display Modes |
 Linear Mode
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
Similar Threads
|
| Thread |
Thread Starter |
Forum |
Replies |
Last Post |
|
And I thought that 750,000,000,000 was a big # !!!
|
mickeyd |
Other topics |
0 |
09-27-2008 01:44 PM |
|
Don't forget to claim your part of the $10,000,000,000 refund
|
mickeyd |
FIRE and Money |
1 |
12-26-2006 12:58 PM |
|
$20,000,000,000 in Taxes.
|
mickeyd |
FIRE and Money |
12 |
11-01-2006 04:49 PM |
|
$423,000,000,000.00
|
Howard |
Other topics |
25 |
02-08-2006 02:59 PM |
|
$2,000,000,000,000- Happy 55th
|
mickeyd |
Other topics |
12 |
12-28-2004 08:19 AM |
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|
