So I'm trying to set-up a trust for my kids. Currently sitting on lots of cash i.e. mid 7 figures. How would you invest it and would you invest it all at once, quarterly/monthly over the next couple of years or wait for a market downturn?
If you inherited large lump sum, how would you invest it?
- Thread starter ArthurF
- Start date
assuming mid 7 figures = $500,000. That's a lot of dough in cash.
First suggestion talk to RobbieB, second suggestion, invest the rest leaving a 3month emergency fund to cover any short-term liabilities.
You mention kids. Have you opened a 529? If it was ME I would just transfer the entire 500k into my VG Broker. Then I would purchase into my Asset Allocation of 25% Small Cap Stocks, 25% Mid Cap Stocks and 50% Large Cap stocks (assuming the least volatility is within the large cap).
Some might suggest some bonds, or possibly CDs. The rates on CDs will go up in the next year, but that's too low of a risk tolerance for me during the accumulation phase.
You could go 100% VTI
or if it was ME and my AA, it would end up to be 125k VBK, 125k VOT, 250k VUG.
Or find a similar (cousin) index fund in an ETF to Mutual Fund comparison tool.
We could get into all sorts of subsidy concerns etc, but I personally take the approach of plowing cash into equities as soon as I have liquidity.
First suggestion talk to RobbieB, second suggestion, invest the rest leaving a 3month emergency fund to cover any short-term liabilities.
You mention kids. Have you opened a 529? If it was ME I would just transfer the entire 500k into my VG Broker. Then I would purchase into my Asset Allocation of 25% Small Cap Stocks, 25% Mid Cap Stocks and 50% Large Cap stocks (assuming the least volatility is within the large cap).
Some might suggest some bonds, or possibly CDs. The rates on CDs will go up in the next year, but that's too low of a risk tolerance for me during the accumulation phase.
You could go 100% VTI
or if it was ME and my AA, it would end up to be 125k VBK, 125k VOT, 250k VUG.
Or find a similar (cousin) index fund in an ETF to Mutual Fund comparison tool.
We could get into all sorts of subsidy concerns etc, but I personally take the approach of plowing cash into equities as soon as I have liquidity.
wmc1000
Thinks s/he gets paid by the post
Mid seven figures is more like = $5,000,000 - Good advice though kgtest
latexman
Thinks s/he gets paid by the post
Uh, that's 6 figures.
Lukeee
Recycles dryer sheets
- Joined
- Feb 20, 2018
- Messages
- 145
Mid 7 figures to me is $5M....
For me it all boils down to when you expect to dip into any of the money.
Less than 5 years
5-10 years
10+ Years
For me it all boils down to when you expect to dip into any of the money.
Less than 5 years
5-10 years
10+ Years
Fedup
Thinks s/he gets paid by the post
I was thinking the same thing. But I thought this is a new math.
To gain your inheritance, you must first spend the night in a haunted house
Perhaps you should read over the recent thread about safes...
I used to think that dollar cost averaging was the best way to enter/exit the market, but I'm not sure I do any more. I've encountered some studies (can't remember which threads) here that say there's no definitive advantage when you're talking about one lump of dough.
If the kids are many (>10) years away from accessing the money, it probably matters less.
I wonder whether the more important question is whether a trustee will be overseeing it. If so, you need to think about the parameters you want to guide the trustee's actions, like asset classes and rebalancing triggers, or when each child will get his share, or whether to disburse it in stages, etc.
I expect my kids wish I had a problem like yours! Good luck!
When you say mid 7 figures, do you mean you are in physical possession of ~5 m-m-million in cash?
Perhaps you should read over the recent thread about safes...I used to think that dollar cost averaging was the best way to enter/exit the market, but I'm not sure I do any more. I've encountered some studies (can't remember which threads) here that say there's no definitive advantage when you're talking about one lump of dough.
If the kids are many (>10) years away from accessing the money, it probably matters less.
I wonder whether the more important question is whether a trustee will be overseeing it. If so, you need to think about the parameters you want to guide the trustee's actions, like asset classes and rebalancing triggers, or when each child will get his share, or whether to disburse it in stages, etc.
I expect my kids wish I had a problem like yours!
Good luck!
HI Bill
Thinks s/he gets paid by the post
- Joined
- Dec 26, 2017
- Messages
- 2,556
I'd watch the market for up to a few weeks, and when it drops 2-3%, just go all-in. Personally, I'd go with 50% VTI, 25% VUG, and 25% VOO (I know, all heavily large-cap weighted)....as long as you're willing to ride out the market ride. If there's ANY reason you might need to tap any of this, I'd keep 1-2% in cash/moneymarket/CDs.
aha!
I figure once you have mid six, you wouldn't need my advice lol
Brain cannot compute mid 7 figures, something I might never obtain in my life heh.
Setting up a trust is fairly straightforward. See an attorney to see it up, then retitle the accounts that have your mid 7 figures.
As for what to invest in, read up here and on bogleheads to educate yourself about asset allocations. Buy some low expense index ETFs to fit your chosen asset allocation.
As for what to invest in, read up here and on bogleheads to educate yourself about asset allocations. Buy some low expense index ETFs to fit your chosen asset allocation.
ArthurF, you haven't given people much to go on.
How about introducing yourself over here and providing a little background? That makes it much easier to give you good advice.
Hi, I am... - Early Retirement & Financial Independence Community
How about introducing yourself over here and providing a little background? That makes it much easier to give you good advice.
Hi, I am... - Early Retirement & Financial Independence Community
Chuckanut
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
With the market bumping up against all time highs I would dollar cost average or value average.
Luck_Club
Full time employment: Posting here.
- Joined
- Dec 5, 2016
- Messages
- 733
Nothing but short term treasuries for 12-24 months
I'm assuming this is a recent inheritance. The age old advice is always to do nothing with any large inheritance for 12-24 months. I think this would apply to investing as well. Others have advised invest it along your current allocation. The 2nd assumes a high level of knowledge about and confidence in investing in the markets.
It is one thing to see a retirement account worth a few hundred thousand take a 10% drop, its another to watch $500,000 vaporize in a month.
With that being said, I would recommend setting up a mock portfolio with the values you would be investing in the market, and watch it for a year. This way you become accustomed to seeing the daily noise in the portfolio.
Also with that much money you may want to explore "managed money" through fidelity, Schwab or. They can help with tax loss harvesting and tax efficient investing options.
I'm assuming this is a recent inheritance. The age old advice is always to do nothing with any large inheritance for 12-24 months. I think this would apply to investing as well. Others have advised invest it along your current allocation. The 2nd assumes a high level of knowledge about and confidence in investing in the markets.
It is one thing to see a retirement account worth a few hundred thousand take a 10% drop, its another to watch $500,000 vaporize in a month.
With that being said, I would recommend setting up a mock portfolio with the values you would be investing in the market, and watch it for a year. This way you become accustomed to seeing the daily noise in the portfolio.
Also with that much money you may want to explore "managed money" through fidelity, Schwab or
. They can help with tax loss harvesting and tax efficient investing options.
Oz investor
Full time employment: Posting here.
first i assume , all the children are currently healthy ( and not needing special medical care )
secondly 'kids' i am assuming are all under 21 years of age
i think there will be a market ( and property ) downturn , sooner rather than later , so i wouldn't rush to put all the cash to work ( before the downturn )
i would consider property trusts as one place to put SOME cash
how about 25% of the cash into a mix of stocks ( or ETFs ) , property trusts and floating rate securities .. i think you call them TIPS over there and the rest in CDs of say 3 month or 6 month durations until various markets turn down and THEN invest some cash into the distressed asset classes
i would NOT go 100% invested and would keep some sort of cash buffer ( in CDs) for emergencies or rare opportunities, ... say a rental property for the trust .
good luck ( and good work thinking of the children early )
Oz investor
Full time employment: Posting here.
if i was able to gift a 7 figure amount the my children , i might keep my details very private as well ( and you can call me paranoid if you like )
but a few more details might improve the advice quality as well
- Joined
- Apr 14, 2006
- Messages
- 23,059
Well, when my parents died earlier this year and I inherited the Gumby family fortune, I took all that money down to the corner store and bought a Diet Dr. Pepper and a pack of smokes. And I still had 36 cents left after that!
Oz investor
Full time employment: Posting here.
i was born into a frugal family ( both sides )
any inheritances ( when i get anything at all ) has always been above $40 ( US ) even from great-great aunts and uncles .
sadly there are no Rothchilds , Gettys , or Rockefellers in my bloodlines
but little fish are sweet ( and gratefully accepted )
Lakewood90712
Thinks s/he gets paid by the post
- Joined
- Jul 21, 2005
- Messages
- 2,223
Although we have some very smart people on this forum ( not me LOL ) , go see a good estate planning Attorney.
Me, I would take the next plane to Las Vegas or Atlantic City and put it all on on the Roulette wheel, 23 red.
Me, I would take the next plane to Las Vegas or Atlantic City and put it all on on the Roulette wheel, 23 red.
Another Reader
Thinks s/he gets paid by the post
- Joined
- Jan 6, 2013
- Messages
- 3,413
Wastrel!
HI Bill
Thinks s/he gets paid by the post
- Joined
- Dec 26, 2017
- Messages
- 2,556
10% = $5M+!!! Maybe not a bad thought....If I had $5M to blow, I'd buy a large liveaboard dive boat, and hire some crew...and start travelling!Take 10% and just blow it -
Invest the other 90% as you wish.
Car-Guy
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I know you are joking (I think) but if you are serious, I don't think you'll find any casino in AC that would take a $5m bet on a straight up Roulette number. However, you "might" find one or two in Vegas that would take such a bet. (Maybe) Since the unlikely hit would cost them $175m.
Last edited:
- Joined
- Apr 14, 2006
- Messages
- 23,059
I know. They really should have set up a spendthrift trust.
DrRoy
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I would splurge on a couple % of it. Invest the rest at 60/40 over time, maybe 1-2 years. VTI is good for equities, and also build an investment grade corporate bond ladder. You can now get 2+% on the cash that you are sitting on, which seems big compared to the last 10 years.
