I had mentioned him on another thread. He lives entirely on government payments and recently bought a house. He is very unsophisticated and gullible leading to people probably milking him for money.
He got a VA loan on a $247K house. The monthly payment (mortgage, tax, insurance) is something like $2200. He gets $3400 VA disability plus $700 social security.
He previously paid $900 rent so the jump to $2200 plus other house expenses is something he is not used to. He plays fast and loose with his money and it looks like he will be operating at a negative cash flow if he does not tighten his belt.
His father died this week and he is likely to get $50K inheritance.
He seems to have absolutely no financial literacy. He has a checking account and a savings account at a credit union but has no idea what interest he is getting.
I am going to advise him to try to do something sensible with the $50K.
My initial thought is to have him open an account somewhere like Fidelity where he can get a 5% return either on a money market fund or some T Bills. I might have to be set up as an interested party to help him.
My main question is what people think the asset allocation should be.
The main goal seems to be to get some sort of return and maybe structure it in a way that slows down his spending on useless stuff or having it sucked by his friends.
With such a small amount of money and a negative cash flow does it make sense to keep it 100% in fixed income?
$50K seems basically like an emergency fund. BTW he seems to not have any credit card debt.
I thought maybe to put $10K into some sort of equity allocation and maybe DCA into that. He has never had investments so any volatility will probably seem scary and I don't want to get blamed for pushing him into stocks.
BTW he drinks too much but as far as I know does not have any drug use sucking away money.
Also, I realize that I probably should not get sucked into this too deeply.
Thanks.
He got a VA loan on a $247K house. The monthly payment (mortgage, tax, insurance) is something like $2200. He gets $3400 VA disability plus $700 social security.
He previously paid $900 rent so the jump to $2200 plus other house expenses is something he is not used to. He plays fast and loose with his money and it looks like he will be operating at a negative cash flow if he does not tighten his belt.
His father died this week and he is likely to get $50K inheritance.
He seems to have absolutely no financial literacy. He has a checking account and a savings account at a credit union but has no idea what interest he is getting.
I am going to advise him to try to do something sensible with the $50K.
My initial thought is to have him open an account somewhere like Fidelity where he can get a 5% return either on a money market fund or some T Bills. I might have to be set up as an interested party to help him.
My main question is what people think the asset allocation should be.
The main goal seems to be to get some sort of return and maybe structure it in a way that slows down his spending on useless stuff or having it sucked by his friends.
With such a small amount of money and a negative cash flow does it make sense to keep it 100% in fixed income?
$50K seems basically like an emergency fund. BTW he seems to not have any credit card debt.
I thought maybe to put $10K into some sort of equity allocation and maybe DCA into that. He has never had investments so any volatility will probably seem scary and I don't want to get blamed for pushing him into stocks.
BTW he drinks too much but as far as I know does not have any drug use sucking away money.
Also, I realize that I probably should not get sucked into this too deeply.
Thanks.