Large inheritance ... where do I start?

[DD214_DOC]

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So I recently discovered the actual amount we will be getting as part of an inheritance (>$1M). I really don't know anything about finance and investing beyond the basics, and I have no idea what to even do with that amount of money, or where I would even keep it safe.

Any suggestions on books or websites to get me started? The first step I guess is to find out where I would put it to keep it safe, but I don't even know that since the amount is way over the FDIC insured limit. After that, I'm not touching it until I better understand what I'm doing.

 

[EMorIM]

So I recently discovered the actual amount we will be getting as part of an inheritance (>$1M). I really don't know anything about finance and investing beyond the basics, and I have no idea what to even do with that amount of money, or where I would even keep it safe.

Any suggestions on books or websites to get me started? The first step I guess is to find out where I would put it to keep it safe, but I don't even know that since the amount is way over the FDIC insured limit. After that, I'm not touching it until I better understand what I'm doing.

Good books: bogleheads guide to investing (I think that's the title), white coat investor.

I think those two would give you an excellent start. The short answer for what to do with this windfall is pay down high interest debt and invest in index funds ("target retirement" funds through vanguard are good for people who have little experience. Pick one where the target date is far away and it will be mostly stocks)

 

[ThoracicGuy]

Here's a good link about this:

https://www.bogleheads.org/wiki/Managing_a_windfall

 

[QofQuimica]

Here's a good link about this:

https://www.bogleheads.org/wiki/Managing_a_windfall

This. And don't be in a rush, OP. There's plenty of time to think about what you want to do.

 

[The White Coat Investor]

# 1- Four+ banks- $250K each is FDIC insured. Then take your time figuring out what you're going to do with it. The Bogleheads link is good. Here's an article I did a while back:

http://whitecoatinvestor.com/what-to-do-with-a-windfall-friday-qa-series/

 

[Mman]

# 1- Four+ banks- $250K each is FDIC insured. Then take your time figuring out what you're going to do with it. The Bogleheads link is good. Here's an article I did a while back:

http://whitecoatinvestor.com/what-to-do-with-a-windfall-friday-qa-series/

FDIC insurance is per person. A joint account with 2 owners (say husband/wife) is insured up to $500K at a single bank.

 

[Mad Jack]

FDIC insurance is per person. A joint account with 2 owners (say husband/wife) is insured up to $500K at a single bank.

Incorrect.

Q: How much deposit insurance coverage do I qualify for?

A: The standard deposit insurance amount is $250,000 per depositor, per FDIC-insured bank, per ownership category.

https://www.fdic.gov/deposit/deposits/faq.html

You get 250k per bank per category of investment that is covered.

 

[Mman]

Incorrect.

Q: How much deposit insurance coverage do I qualify for?

A: The standard deposit insurance amount is $250,000 per depositor, per FDIC-insured bank, per ownership category.

https://www.fdic.gov/deposit/deposits/faq.html

You get 250k per bank per category of investment that is covered.

Did you even read the rest of the link you pasted?

Q: Can I have more than $250,000 of deposit insurance coverage at one FDIC-insured bank?

A: Yes. The FDIC insures deposits according to the ownership category in which the funds are insured and how the accounts are titled. The standard deposit insurance coverage limit is $250,000 per depositor, per FDIC-insured bank

https://www.fdic.gov/edie/fdic_info.html

What is a joint account?

This is a deposit account owned by two or more people and titled jointly in the co-owners' names only, with no beneficiaries. If all co-owners have equal rights to withdraw money from a joint account, a co-owner's shares of all joint accounts at the same insured bank are added together and the total is insured up to $250,000. Note that jointly owned revocable trust accounts are not included in this ownership category.

If a couple has a joint money market deposit account, a joint savings account, and a joint CD at the same insured bank, each co-owner's shares of the three accounts are added together and insured up to $250,000 per owner, providing up to $500,000 in coverage for the couple's joint accounts.

 

[Mad Jack]

Did you even read the rest of the link you pasted?

Q: Can I have more than $250,000 of deposit insurance coverage at one FDIC-insured bank?

A: Yes. The FDIC insures deposits according to the ownership category in which the funds are insured and how the accounts are titled. The standard deposit insurance coverage limit is $250,000 per depositor, per FDIC-insured bank

https://www.fdic.gov/edie/fdic_info.html

What is a joint account?

This is a deposit account owned by two or more people and titled jointly in the co-owners' names only, with no beneficiaries. If all co-owners have equal rights to withdraw money from a joint account, a co-owner's shares of all joint accounts at the same insured bank are added together and the total is insured up to $250,000. Note that jointly owned revocable trust accounts are not included in this ownership category.

If a couple has a joint money market deposit account, a joint savings account, and a joint CD at the same insured bank, each co-owner's shares of the three accounts are added together and insured up to $250,000 per owner, providing up to $500,000 in coverage for the couple's joint accounts.

I wasn't disagreeing with that part of your comment. I had misread what you said and thought that you were saying a person was only insured to a maximum of $250k, not $250k per bank. It seems that was a misreading on my part.

Personally, I wouldn't want an inheritance in a joint account, I'd much prefer separate accounts at separate banks. But if you've already got a joint account, by all means, load 500k into it.

 

[Doctor4Life1769]

I'd load 250k into 4 banks.
Don't want too many eggs in one basket, in case the depression really flat lines banks. Target the larger banks too.

 

[Plastikos]

The depression? Flats lines the banks? When is this depression coming and why would it flat line banks, now that they are better capitalized and run through catastrophe scenarios greater than the last annualy? There hasnt been a run on the bands since the FDIC was instituted, it worked as intended.

250k in one account in one bank isnt a big deal, you have to match your risk avoidance activity to some weighting of the probability of the event occurring. You should have far more than 250k in several different accounts that isnt protected by FDIC at all (spica sure, but its not the same thing) after a few years as an attending, and later on 7 figures, 8 etc......

 

[Stroganoff]

When is this depression coming

My depression already came since I don't have a 7 figure windfall. 🙁

 

[The White Coat Investor]

FDIC insurance is per person. A joint account with 2 owners (say husband/wife) is insured up to $500K at a single bank.

There are all kinds of variations on this theme- adding children, trusts etc. It's only a million though, so you don't have to go too nuts about it. He probably won't keep it all in bank accounts for very long anyway before moving it into investments.

 

[Doctor4Life1769]

The depression? Flats lines the banks? When is this depression coming and why would it flat line banks, now that they are better capitalized and run through catastrophe scenarios greater than the last annualy? There hasnt been a run on the bands since the FDIC was instituted, it worked as intended.

250k in one account in one bank isnt a big deal, you have to match your risk avoidance activity to some weighting of the probability of the event occurring. You should have far more than 250k in several different accounts that isnt protected by FDIC at all (spica sure, but its not the same thing) after a few years as an attending, and later on 7 figures, 8 etc......

It will come. We are bound for another one, if you look at the cycle.

 

[Plastikos]

Maybe a recession eventually, which is different than a depression.

 

[Mman]

It will come. We are bound for another one, if you look at the cycle.

the only certainty about the future is that we cannot predict it. There is no cycle that tells you when and what will happen.

 

[Stroganoff]

There is no cycle that tells you when and what will happen.

Oh, there are lots of quantifiable cycles. Lots. Every sector as well as the market as a whole. The wildcard is central bank manipulation which messes with the natural cycles and creates unnatural bubbles and more violent bursts and crashes.

 

[Mman]

Oh, there are lots of quantifiable cycles. Lots. Every sector as well as the market as a whole. The wildcard is central bank manipulation which messes with the natural cycles and creates unnatural bubbles and more violent bursts and crashes.

there are cycles you can identify in hindsight. Unfortunately a grand total of zero have been shown to predict future results so it is useless to even think about them. In fact, it's worse than useless, it's actually dangerous because it detracts from you making correct decisions.

 

[Plastikos]

Oh, there are lots of quantifiable cycles. Lots. Every sector as well as the market as a whole. The wildcard is central bank manipulation which messes with the natural cycles and creates unnatural bubbles and more violent bursts and crashes.

The central bank is part of the natural cycle. To dismiss it simply as manipulation is to basically misunderstand the very basis for the economy and how money flows and works. Dont fight the fed, has yet to be an incorrect position. Poor moves can definitely exacerbate things, but its part of the game so its...natural.

I dont think certain broader themes/cycles are terribly hard to see, for example that we started a tightening cycle at the end of qe3. There may be certain implications taken away from that, but its not difficult to see per se, just difficult to consistently profit from. I dont think seeing the fed would raise last December and markets would do poorly afterwards was very hard to see either, basically been foreshadowed for over a year.

 

[Stroganoff]

The central bank is part of the natural cycle. To dismiss it simply as manipulation is to basically misunderstand the very basis for the economy and how money flows and works. Dont fight the fed, has yet to be an incorrect position. Poor moves can definitely exacerbate things, but its part of the game so its...natural.

We have a fundamental disagreement then. I don't view Keynesian economics or central bank existence as anything but detrimental to sound free market capitalism. I view their very existence as unnatural.

Re: the nominal values of the stock market and cycles and FOMC interest rate stuff, that wasn't really what I was referring to in cycles. A lot of the cycles become more clear cut when you take two metrics and plot the chart of one divided by the other. You'll see some nice cycles like clockwork.

 

[Mman]

Re: the nominal values of the stock market and cycles and FOMC interest rate stuff, that wasn't really what I was referring to in cycles. A lot of the cycles become more clear cut when you take two metrics and plot the chart of one divided by the other. You'll see some nice cycles like clockwork.

and you still can't use it to predict future performance.

Cycles are perfect in hindsight because you can always fit your equation to the data. They just never work going forward.

 

[Stroganoff]

and you still can't use it to predict future performance.

Cycles are perfect in hindsight because you can always fit your equation to the data. They just never work going forward.

I'm not even discussing using cycles to predict performance (for example, in an investment portfolio). We may be talking past each other.

 

[Mman]

I'm not even discussing using cycles to predict performance (for example, in an investment portfolio). We may be talking past each other.

so you use cycles to describe uselessly what happened in the past without ability to predict the future?

It's like Warren Buffett's recent comment about economists. They all have great credentials and say lots of smart sounding things, but you've never seen one that was any good at actually making money in the stock market.

 

[Plastikos]

We have a fundamental disagreement then. I don't view Keynesian economics or central bank existence as anything but detrimental to sound free market capitalism. I view their very existence as unnatural.

Re: the nominal values of the stock market and cycles and FOMC interest rate stuff, that wasn't really what I was referring to in cycles. A lot of the cycles become more clear cut when you take two metrics and plot the chart of one divided by the other. You'll see some nice cycles like clockwork.

The central bank, aside from their mandate, functions as a clearing house for payments. They allow the free market to run smoothly and efficiently. You pay your mortgage from BofA to the lender at JPM and the fed facilitates that transfer. No need to make it conspiratorial or political. Inject politics into your investing and monetary understanding at your own peril.

 

[Stroganoff]

The central bank, aside from their mandate, functions as a clearing house for payments. They allow the free market to run smoothly and efficiently. You pay your mortgage from BofA to the lender at JPM and the fed facilitates that transfer. No need to make it conspiratorial or political. Inject politics into your investing and monetary understanding at your own peril.

JFC. The Federal Reserve has nothing to do with the ACH system. I've worked at 2 Financial Institutions and 1 Financial Servicer that provides services to over a 1000 FIs. What is your experience?

 

[Pisiform]

Broooo pay my loan plz


Sent from my iPhone using SDN mobile

 

[Plastikos]

The fed operates Fedwire funds service, NSS, CHIPS, and greater than 60% of ACH volume via FedACH among other things. These cover larger domestic and international transactions via the interbank system. Low volume, small, pos transactions do occur via ACH/EFT among other small services.

I could also post links for you, but Im sure you're actually well aware since you were in financial services, and likely wouldnt trust the source as it is governmental and would obviously be part of the problem and conspiracy.

 

[dynx]

We have a fundamental disagreement then. I don't view Keynesian economics or central bank existence as anything but detrimental to sound free market capitalism. I view their very existence as unnatural.

Re: the nominal values of the stock market and cycles and FOMC interest rate stuff, that wasn't really what I was referring to in cycles. A lot of the cycles become more clear cut when you take two metrics and plot the chart of one divided by the other. You'll see some nice cycles like clockwork.

I had to report your post sorry. I think frank stupidity is a TOS violation...first post I've ever reported by the way I hope I did it right!
So your point is:
There's all these great cycles! If you look at them like I do you can see them clearly! They don't predict jack! (Which by the way...a cycle by definition should do at least in general) but I thought I'd chime in to sound smart.
TOS violation. Amiright?!?!amiright?!

 

[deleted547631]

So I recently discovered the actual amount we will be getting as part of an inheritance (>$1M). I really don't know anything about finance and investing beyond the basics, and I have no idea what to even do with that amount of money, or where I would even keep it safe.

Any suggestions on books or websites to get me started? The first step I guess is to find out where I would put it to keep it safe, but I don't even know that since the amount is way over the FDIC insured limit. After that, I'm not touching it until I better understand what I'm doing.

If I had that kind of windfall I'd put it into a portfolio consisting of low expense ratio Vanguard admiral-class mutual funds and ETFs at 70% and bonds at 30%. Assuming a conservative 5% growth rate and a safe withdrawal rate of 4%, you could live off the interest for life assuming your expenses are less than $50K/year. Welcome to financial independence!