Help Needed... Too Much Money :D

[bobchic]

Hello everyone

I hope Im in the right area.

I am going to be recieving a fair amount of money and I have no idea what to do with it!!

I was going to see a financial adviser but since looking at the fees Im not sure the amount of money I have come by really warrents the fees I would need to pay for their advice!

I currently have bills that are over half the amount I am recieving.. Would it be best to pay off the bills and then invest the rest of the money?

If I invest without paying off my debts I want to be able to use the interest earnt to go on holidays and go towards paying debts etc. But if the funds are placed in a term deposit at 8.40% over 2 years I will only have earnt $4100.

Is there a better way to invest the funds? Or is there something else I should do that I havnt thought of?

Im so scatter brain with ideas Id really like anyones opinon...

Thanks and sorry if this is in the wrong area...

Sonia

[CybrMike]

Hi and welcome. So you are getting like around $25,000?

Simple answer.

1. Pay off your debts.
2. Go on "holiday"
3. Invest the rest in diversified Index funds (no financial advisor).

Which index funds will depend on a lot of factors, including your age, country that you live in, etc.

[73ss454]

And where do you get 8.4%?

[REWahoo]

Originally Posted by 73ss454

And where do you get 8.4%?

From bobchic's profile:

State - Australia

[Want2retire]

Bobchic, I would suggest reading some books on investing and developing an asset allocation and investment plan.

Here is a link to a list of some investment books recommended by the diehards message board:

Diehards book list

I have read many of the books on that list, and have found them to be very informative.

Hope this helps!

[ziggy29]

Among other things, you need to determine your current situation and your longer-term goals with whatever is left.

That could mean using some of it to pay off debts and/or build an emergency fund, and investing the rest for a longer-term goal -- whether that goal be to buy a car (with cash) at some point in the future, a down payment on a home, retirement or something else. Without knowledge of things like age, marital status and timeframe for longer-term goals, it's really hard to say anything specific.

[FinanceDude]

6 months living expenses at 8.4%

Leave $1000 for doing somthing "fun'........

The rest goes to retiring debt..........

[73ss454]

Originally Posted by REWahoo

From bobchic's profile:

State - Australia

Gottcha!

[bobchic]

Thanks for the replys

I am 23yrs old living by myself (with the very real posibility of being married in the next year or so)

Right now I want a car and to pay off a smal amount of debt.

In the next 5 years I want to pay for a trip overseas (live and work for a year or more in Europe and America)

And then I want to have the rest for a house deposit (My employer pays 9% toward my super and I contribute through out the year where I can. So Im not too concerned about retirement)

Does this help? I want something that returns high. Is investing a stupid thing to do at the moment? What about buying specific shares?

My debt is managed at the moment so would it be best just to keep paying it as is or pay it off and put the replayment money towards an investment/savings plan?

Thanks again

[Meadbh]

Originally Posted by bobchic

I want something that returns high. Is investing a stupid thing to do at the moment? What about buying specific shares?

We all want something that returns high!

Investing is never a stupid thing to do unless you need the money immediately. Generally speaking, the higher the (potential) reward, the higher the risk. Get to know what your risk tolerance is. At age 23, your long term investments should be biased towards equities to optimize growth, but you have stated you may get married and travel in the medium term, so you need to put money for that into a safe but liquid vehicle, such as CDs or a money market fund.

Originally Posted by bobchic

My debt is managed at the moment so would it be best just to keep paying it as is or pay it off and put the replayment money towards an investment/savings plan?

What is the debt for? If it is for a car, or consumer goods, that's "bad debt" and you should pay it off ASAP. If your debt is for investments (e.g. rental property) it is being used to earn you money and is probably tax deductible. That's "good debt". Really rich people never borrow for stuff: they only borrow to make more money.

You used the expression "at the moment" so I wonder if you are British. YMMV about tax deductible nature of investment debt. Everything else stands.

[bobchic]

haha.. no not british... im as aussie as they come.. lol

yes i guess you would class it as bad debt... but i guess if i pay it off i will just get more bad debt cause im terrible like that.. so if i just keep the one bad debt it will stop anymore.. hopefully..

Im really bad at any money management... hence why I am asking for help

All your ideas and advice are very helpful... thank you so much

[kombat]

Originally Posted by Meadbh

You used the expression "at the moment" so I wonder if you are British.

Is "at the moment" a British thing? If so, I never knew that. It's quite common here in Canada. I thought it was something said pretty much everywhere.

[Want2retire]

Originally Posted by kombat

Is "at the moment" a British thing? If so, I never knew that. It's quite common here in Canada. I thought it was something said pretty much everywhere.

I thought so, too. Apparently not!

[Animorph]

If the debt is at a lower interest rate than the 8.4% interest you can get, and assuming the tax treatment is the same for both (pay taxes on the interest, deduct debt interest paid), then it is "good" debt and you make money by saving your money at 8.4%. Otherwise, if the debt is at a higher interest rate or is not tax deductable, then it is "bad" debt and you will make more by paying off the debt than you will by saving the money at 8.4%. Almost always paying off the debt is a good move.

I assume the Australian market is down along with most of the world. It's not a bad time to get into mutual funds if you won't need the money for at least two and maybe more years. You may have to put up with losses initially still, who knows, but prices are down substantially from last year's peaks.

If you may need the money in less than two years I'd go with something like a CD or money market fund at your 8.4%.

[birdland1950]

if you get an inheritance money and you owe backchild support what happens?will they take it out of an in hertance money?evenif the children are all grown?