Ok. I just inherited a wad of cash. What the hell do I do now?

-- Allison (lowea@phscare.org), November 16, 1999

Answers

Okay, this will sound VERY adult and mature, but I inherited cashola a few years ago ( I was 25)and went through the same fear. first I paid off everything...I mean everything, my student loans, my dentist bill, some random magazine subscription that kept getting put in "It can wait" pile. And then I went out and found a trustworthy, Financial Advisor. yea, eeeuww. Anyway he's a good guy, a little you know 'financial' as in very straight-laced and not into idle chatter. But so far his suggestions kick butt. There is some organization, actually two of them, that you can contact to find the "good ones" in your area, the ones who are actually licensed to this. And you can pick a financial planner or an accountant, maybe not an accountant some other word. Sorry this isn't detailed advice, I can't even remember the name of those organizations. But you might consider checking out npr.org, they have a "Managing Your Money" radio show every weekend, on which they mention these orgs all the time. There's probably a link on the site. So my particular FP gave me all the options, I asked all the questions,i.e. "what if I want to use the money in 3 years for a house?" "what portion should I save for retirement?" Anyway, I had a great experience and feel confident with my decisions. One more thing, I did use some of the money for 10 days in Cozumel. That was totally worth it as well.

-- Laura (windyis@hotmail.com), November 17, 1999.

Well, now. You could always give it to your favorite readers! *ahem*

Kidding.

Seriously, though -- go play. Take half of it and pop it in a money market account through a bank that you trust (key there -- that you trust), and take the other half for you. Pay stuff off, buy a new laptop, and travel the country (or the world) and write about it.

Maybe that's just my dream. :) Where's all my rich relatives, dammit...?

~E~

-- Elizabeth B (gypsy@moderngypsy.com), November 17, 1999.

Tiffany has this tiara, made of platinum, of dragonflies, done in pearl and diamond.

My only decent advice about money is to not listen to your relatives when they tell you what do with it. Hire someone. It is worth $75 to pay a disinterested financial manager to chart out a good course for you.

But a tiara DOES last forever.

-- Kristin (kristin@sperare.com), November 17, 1999.

This answer is boring, boring, boring, but it's still what I would do.

1. Pay off student loans (and other debts, if I had any others)

2. Stick the rest in a money market fund for a while until I had strong feelings about what to spend it on. Vanguard, Fidelity, Schwab, whatever, they all have good ones.

If nothing else, your money is making itself more money sitting there, and unlike a CD, you can get it anytime (most money market funds have checkwriting privileges; unlike money market accounts with banks, which not only don't let you write checks but give you a lower interest rate).

Actually I'd also stick $2000 into an IRA for 1999. That's the maximum annual contribution anyway. Same suspects as for the money market fund.

Who says you have to do anything right away?

-- Dorie Apollonio (deae@pge.com), November 18, 1999.

personally, i'd travel! but, since you're undecided right now as to what to do with it, you might just want to stick it in a cd for a year, which would give you a chance to really examine your life, and where you would like it to go. buying a house wouldn't be practical if you don't know for sure you want to live there forever, and you certainly don't want to blow it! believe me, that sucks! just invest it short term for now, take out a little fun money for that trip to tiffany's, and enjoy yourself! cheers! hez

-- hez (lmjaliashez42@hotmail.com), November 21, 1999.

Get a Financial Advisor, period. I could use some new pink flamingoes....

Micah

-- Micah Bedwell (bedwellm@wellsfargo.com), December 17, 1999.

Okay, this is coming a bit late but under the presumption that you have not blown it all in riotous living and millennial partying...

1 - Pay off any consumer debt, any debt that is not tax-advantaged, any debt that is not at a below-market interest rate. (That is, if your student loans are running at one or two percent, keep 'em and invest the money -- even in a bank CD you would be making a profit compared with paying off a two percent loan. But if the student loans are eight or ten percent, pay them off.) Never carry dept on a credit card, those rates will kill you.

2 - Buy yourself a toy or two. Do you really need a new PC, so treat yourself. Is your car ready to expire? Here's your chance to replace it in a cash deal -- i.e., no car payments to make (but then be sure to put the equivalent of car payments into a savings account so you would be paying yourself off and would have a nest egg set aside for your next car at some future time).

3. Invest. Somebody mentioned an IRA. If you have not put money into an IRA for 1999 it is not too late, you can still do it. And you could also put money in one for 2000! I wouldn't play the market, that is, I would avoid buying individual stocks. It's gambling; you can make a bundle but you can also pick a loser. I'd suggest mutual funds -- no load mutual funds (a "no load" fund has no big sales commission when you buy or when you sell) that track major indices, such as the DOW -- go for maybe two or three decent no load funds.

4. Keep some liquidity.... put something (one or two month's pay?) into a savings account or maybe a money market account that lets you write checks so you can have access to cash in an emergency... put another month or two into CD's, maybe splitting into more than one, with alternating renewal dates, with say three month or six month maturities... and then, after you have put $2k into 1999 and 2000 IRA's (picking one or two good no load mutual funds), put anything that's left into one or two good no load mutual funds (could be the same as in your IRA or different). That should cover you. Liquid cash for emergency use, tax advantaged investment in IRA, the rest into investment that you can withdraw at some future time (downpayment on a house, grad school, or hell, maybe it will just grow until you are ready for retirement... whatever)

-- Jim (jimlawrence@hotmail.com), January 06, 2000.