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Rickt 01-07-2013 09:06 AM

Seeking advice regarding investing $10K inheritance
 
My wife recently received $10K in inheritance after a family member passed away. We are 53 yeras old with two children 18Yr & 24Yrs old. We do not need the cash as we are self employed with a decent income, investments and assets. My wife wants to invest the $10K with $2.5K for each of the kids and $5K for self. Is this a good idea or it would be advisable to invest the entire $10K in her name? Also which mutual funds would you suggest that she invest in? I was thinking Vanguard's growth funds viz: Vanguard Capital Opportunity, Mid-Cap Growth & Small cap Growth Funds. Any suggestions/guidance would be appreciated. Thanks

pb4uski 01-07-2013 09:37 AM

The $2.5k for each of the kids would be a gift and they would have control of the money since they are adults and their names are on the accounts. If you think they will be responsible with the funds by all means go ahead, but if you have reservations then she might want to keep it in her name and give it to them later.

Or alternatively, if they each have income she could fund a Roth IRA for each of them and given them a head start on thinking about saving for the future.

I like the Vanguard balanced funds (Wellington, Star, Target Retirement, etc) for something like this - or Total Stock Market Index.

Animorph 01-07-2013 10:23 AM

Roth's for the kids is great if they have income that allows it. I did that when DS saved me some college money. If you don't do that, just add it to your normal retirement savings with your normal AA. That's what happens to all of our extra income.

Lsbcal 01-07-2013 10:49 AM

Quote:

Originally Posted by Rickt (Post 1267254)
My wife recently received $10K in inheritance after a family member passed away. We are 53 yeras old with two children 18Yr & 24Yrs old. We do not need the cash as we are self employed with a decent income, investments and assets. My wife wants to invest the $10K with $2.5K for each of the kids and $5K for self. Is this a good idea or it would be advisable to invest the entire $10K in her name? Also which mutual funds would you suggest that she invest in? I was thinking Vanguard's growth funds viz: Vanguard Capital Opportunity, Mid-Cap Growth & Small cap Growth Funds. Any suggestions/guidance would be appreciated. Thanks

I tilt to value generally though am not adverse to an occasional trade into growth. If you are buy-hold then I'd stick with either value funds and/or blend funds. For midcaps (MSCI index), comparing value and growth since 1992 we see:

midcap value CAGR = 11.1%
midcap growth CAGR = 8.3%

You can find plenty of discussion on this at Bogleheads.


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