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in need of financial planner/investment advice

post #1 of 10
Thread Starter 
so, i'm a dirt poor single mama with 2 kids and no college education. i live paycheck to paycheck and while we never truly suffer, it isnt easy.

i lost my father in july, which sucks majorly, bc he was my best friend, but i am thrilled and terrified to be the beneficiary of his pension. all added up, i will be receiving about $160k. that is both his cash in the bank and the pension added up, but the pension is actually about $273k. although my name was the only one on record, i will be putting $137k aside for my sister. she is mentally ill and cannot be trusted with that kind of cash, so the family and i agree the best way to serve her and her daughter is to give her a lump sum to buy a car (which will basically be what she gets from the money in the bank, about $20k or so) and then dole out the rest, $137k, monthly over as many yrs as i can make it last.

so...i will be charged with management of my own inheritance, plus my sisters. very weighty and scary!

i intend to ue mine this way: pay off student loan and credit cards so that i have zero debt, $30k, buy a new car, $30k, invest the rest, $100k

i will be investing about $127k of my sisters half. the other $10k will be kept available so that i can give her a monthly allowance.

i dont want to do anything risky with the money, i know at least that much, but other than that, i dont know who to trust for advice. any suggestions would be helpful and most appreciated!
post #2 of 10
There must be a lawyer involved in the probate of this estate. Get him or her to give you the name of an investment advisor who can invest this in a manner that you're comfortable with, and set up some parameters for distributions. If you have no experience in this area, you shouldn't be choosing the investments, nor should you rely on an anonymous message board for advice! Nothing wrong with kicking around some ideas, but when it comes to the investments, I'd want professional advice, even if you pay for it. I do! Sorry for your loss.
post #3 of 10
I'm sorry for your loss.

You could go to dave ramsey's website and look for an ELP (endorsed local provider) investment/financial planner. Also read his total money makeover book. Park the money in a money market account until you understand better what to do with it. We like Vanguard for a low cost brokerage firm, so we have a money market account with them. Though a mm account isn't paying much these days, but you can write checks from them and they are better than a savings acct. in a bank.

If you get an advisor or planner make sure you pay him based on an hourly rate not on commission from what he advises you to buy. You could just read some books and talk to some people and then make the decisions yourself using someone like a vanguard or t rowe price. That's what we do. For investing Dave ramsey just recommends dividing your money into good growth mutual funds: growth, growth and income, aggressive growth and international growth. AFTER the fully funded emergency fund. You need to have an emergency fund (ef) of 6 months of expenses. That gives you security and piece of mind without having to liquidate any of the money you invest.

You may want to think over buying a $30k car since by your own words you've been dirt poor. 30k is a lot of car. We bought our new van for $25 and I wish we had spent $13 for the ford focus stationwagon and gotten much better gas mileage. And the only reason we bought new was because we will drive it into the ground over 15-20 years. If you plan to drive it less years, a newer used car is probably better. Maybe one that is 10-15k.

What is your purpose in investing the rest? retirement, going back to school, your kids's education? Knowing what you want to do with the money will help figure out where to invest it because they each have different time frames.

Also what about your living situation? Renting? Mortage? You said dirt poor, so maybe you don't have a house. Maybe this is the time to buy it instead of investing the money.

You have lots of options. I would not make any decisions for a while except to pay off the debt. Don't spend much, but learn about your options. Decide what you want the money to do for you. It's a good time to invest in yourself. Maybe finish your education or train for something you want to do. Provide the security for yourself and your kids that you haven't had.

I'm sorry you have to be responsible for your sister. My friend just had this happen with her parents and an inheritance and her alcoholic mentally ill brother just spent all of his. My friend, on the other hand, paid off debt, bought a new car and paid off her house. You may need to talk to a trust lawyer or the probate lawyer about whether legally you can do what you are proposing. You may not be able to.

Good luck.
post #4 of 10
Originally Posted by enfpintj View Post
If you get an advisor or planner make sure you pay him based on an hourly rate not on commission from what he advises you to buy.

This is great advice. You want a fee based adviser, not one who works off of commission. Honestly, I would take my time with doing anything. Allow yourself time to grieve the loss of your father, and make sure you don't do anything until you fully understand and feel comfortable with it.
post #5 of 10
Originally Posted by Oztok5 View Post
This is great advice. You want a fee based adviser, not one who works off of commission. Honestly, I would take my time with doing anything. Allow yourself time to grieve the loss of your father, and make sure you don't do anything until you fully understand and feel comfortable with it.
Our family's advisor gets paid neither way. His fee is one percent of the assets under management per year. So he buys and sells periodically, not frequently, to keep the portfolio balanced and to reflect his research. I believe the "standard" advice to use a fee based advisor pertains to someone who will spend an hour or two with you to give you advice. You won't find someone to manage your portfolio for you on an hourly basis. Not worth their time.
I don't know the nature of your sister's illness, but it might make your relationship a lot smoother if someone other than you is sending her a monthly "allowance". Because if she wants more than you plan to give her, your relationship will suffer. A financial advisor should do this. (My dad was a probate lawyer and fiduciary and I am a non-practicing lawyer myself. I have seen a lot of this sort of thing. You would not believe how quickly things can get ugly)
post #6 of 10
Why don't you set up a trust fund for her benefit with you and someone else as trustee? Otherwise the money is solely in your name although it's 50% hers? What if you die? The money will go to your next of kin unless you have a will and that person will have no obligation to provide for your sister. I'd find a second trustee and make this whole arrangement above board.
post #7 of 10
First of all, I'm sorry to hear about your loss. This is the worst way to come into some money.

The very first thing I would do is to put the money aside and really think before you do ANYTHING at all. Most financial planners would tell you to wait a whole year before touching it, but in your circumstances, I don't think that's reasonable.

I would suggest that you spend a lot of time reading some financial planning books. I always suggest the financial books "For Dummies" by Eric Tyson. Not because anyone is a dummy... they are really good books, written for the lay person. I refer back to them myself regularly.

About the financial planner. I hate to say this, but you may have a hard time finding someone to actually manage your money because it's really not that much compared to what they usually manage. I would definitely have a one-time session with one, though. Most financial planners have a minimum they will work with. Around here it's usually $1M, sometimes only half a million. They usually charge about 1/2 a percent to manage. Do a LOT of homework on financial planners before hiring one... there are some shady characters out there that are just rubbing their knuckles to have someone come through their door that is instantly richer and uninformed about finances. And don't trust the lawyer probating the will... they often will just suggest a friend and not someone necessarily reputable. Do your own searching for a financial planner. (The Managing Finances for Dummies book will explain in detail how to do this.)

Ditto on the car, what a pp said. We have a relatively high net worth and have *never* spent that kind of money on a car (and one of our cars is a nice Mercedes). Additionally, brand new cars depreciate by an average of 20% the minute you drive it off the lot. So one day after you own that new car, it's not a $30,000 car anymore, it's a $24,000 car. People who have money make it and keep it by making sound financial decisions... buying a new used car is one of the ways people who arrange their finances based on net worth keep their wealth. It must be hard to not want a nice car, but that money will be gone before you know it if you're not careful and if you make purchases like a $30k car.

The best thing to do, as I said above, is to just put the money aside. Live at least 6 months as you have been (of course if you are living in poverty, use some of the money so you're not miserable), and establish your financial goals FIRST... before spending a dime on any bling (and yes, that car would be bling). You have to think long-term rather than instant gratification. I know that can be hard when you perhaps feel like you've been deprived of something as simple as financial security.

An example of thinking long term: let's say you decide to buy a good, reliable car for $10,000 instead of the $30,000 you want right now. Over the course of 30 years, with that extra $20,000 invested in a safe, decent investment returning 7% to you annually, at the end of the 30 years, instead of having just $761,000 you'd have $914,000. That means that by simply making a financial decision to NOT spend $20,000 now, you are $153,000 richer in the end. This is how you have to think when it comes to finances. Not the now, but the tomorrow. You have to ask yourself not whether you want a $10,000 car or a $30,000 car, but if you want a $10,000 car or a $153,000 (which is what the $30,000 would cost you over time) car. Make sense?

It's like finding a new flat-screen TV on sale and putting it on a credit card you can't pay off. That TV wasn't a deal at only $1000 if after you pay all the interest on it, it actually cost you $2000. If you think in these terms it will help you enormously as you approach investing your money.

Good luck! Hope I didn't complicate things too much.
post #8 of 10
i agree with the pps who said NOT to go to a commission-based investment advisor, to think about setting up a will/trust, and that 30K is a lot of car...

post #9 of 10
I agree with most of the PPs. 30k on a car is too much for you right now. I went to a financial advisor who was fee based, she really helped me put things into perspective and I don't even have as much money as you now do. She did recommend an investment vehicle and balanced our 401k (changed my fund choices), but does not "manage" my money through buying and selling individual stocks.
post #10 of 10
I'm sorry that you lost your father and think it's wonderful that you will be taking care of your sister and neice. My sister, who also has MH issues, would go through the money in no time flat. If your sister is on SSI you might need to set up a special needs trust so her benefits don't get messed up recieving money from you on a regular basis.
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