Looking for some financial advice...

[forgop]

My brother and I inherited the family farm after the passing of my grandmother in August which included tillable acres and her house. Yesterday, we closed on the sale of the house and then auctioned off the farm ground and the result was much better than we expected.

Anyway, we're set to close on it by mid-January and then I'll have more than enough money to pay off the mortgage and student loans. After that, I'll still have a significant balance to invest. If you came into a sizable amount of funds, who would you seek out for investment advice? I'm curious about you'd educate yourself and diversify through a portfolio of mutual funds/stocks/bonds/etc that you manage through like a Scottrade, work through a bank or investment firm, etc.

Thanks for any suggestions you may have.

I'd say talk to a number of different professionals: Insurance folks, bankers, personal investors. Do what makes you comfortable. I'f you're going to be paying off debts then sounds lik eyou'll be doing ok, no need to be too greedy. Just my thoughts though. I'm a bit of a pessamist when it comes to finances.

Then again, you could also send me some and I'll hold onto it for ya.

[ashtonlady]

Make sure you talk to an accountant that deals in estate taxes.

[forgop]

Originally Posted by ashtonlady

Make sure you talk to an accountant that deals in estate taxes.

If you're talking about my grandmother's estate, that's not my issue. The will stated for my aunt to pay inheritance taxes due out of money she left to my aunt(who was also her POA and is the executor of the estate).

The only taxes due from the sale/inheritance from my brother and I directly will be related to capital gains above the appraised value when my dad passed in 2008.

[forgop]

Originally Posted by DoctorBJ

I'm a bit of a pessamist when it comes to finances.

Sounds like my brother-he's going to build a $350k house and pay cash for it and then put the rest of the money in CD's. He only pays attention when the market is down and shows his losses, but he never really considers the gains along the way.

I'm up over 40% on my investments myself.

[mosesbotbol]

Put it into a bank escrow until you decide.

You talk to firms like John Hancock, Fidelty or Putnam and see what kind of programs suit your needs. There are also accounting firms that handle "windfall" kind of situations to ensure you are doing the right thing.

As much as I would love an inheritance, having my family alive is even better.

What ever you decide, take your time.

Investment real estate is good depending where you live. In Boston, student housing rentals are generally good investments, especially if you have reserves. You could expect 10-15% return quite easily as well as the intrinsic value of the property. Not everyone lives in strong rental market areas though.

Originally Posted by mosesbotbol

Not everyone lives in strong rental market areas though.

College town are delightful for this.

Originally Posted by forgop

Sounds like my brother-he's going to build a $350k house and pay cash for it and then put the rest of the money in CD's. He only pays attention when the market is down and shows his losses, but he never really considers the gains along the way.

I'm up over 40% on my investments myself.

Having little to invest makes you less willing to take a loss. I don't know if I'd do the huge house and pay cash, a much as make some simple investments and structure things so I was regularly getting payed from my working money, whicle reinvesting to keep it going.

I invest like I gamble. I might not win big, but I don't lose my shirt.

[bobarian]

Whether you go with a big company or a personal advisor, find someone with whom you are comfortable. Discuss your personal and family goals. Where you want to go will help determine how to get there. College tuition, future medical care for family members, a legacy for your children are all things to be considered. Seek guidance before you pay off your mortgage, sometimes payments are not a bad thing. It sounds like you are in a position to look at the big picture for your family, congrats.

[forgop]

Originally Posted by mosesbotbol

As much as I would love an inheritance, having my family alive is even better.

Tell me about it...to get it, I lost both parents and 2 grandmothers in less than 2 years. I'd had 3 of my 4 grandparents since 1986, but it was a lot real quick. In both situations, both parents had lengthy battles that prepared us for it (cancer and sarcoidosis) whereas both grandmothers were the most surprising even though they were 76 & 83 when they passed (stroke and apparent heart attack).

At just 35 years of age, I'd give it all back to have been able to have my dad around another 10+ years as he was just 60 years old.

[forgop]

Originally Posted by DoctorBJ

College town are delightful for this.

I considered this at one time, but it's difficult considering where I'd buy as I'd have to pay a management company to handle everything and that would eat into most of my profit.

[forgop]

Originally Posted by bobarian

Whether you go with a big company or a personal advisor, find someone with whom you are comfortable. Discuss your personal and family goals. Where you want to go will help determine how to get there. College tuition, future medical care for family members, a legacy for your children are all things to be considered. Seek guidance before you pay off your mortgage, sometimes payments are not a bad thing. It sounds like you are in a position to look at the big picture for your family, congrats.

I know some people advise against paying off a mortgage like that, but given what all of us witnessed in the last 2 years during the economical meltdown, there's nothing like owning your home outright. I'm a little less inclined to pay off the student loans at 4.25% when I feel like I could certainly get a better return on my money than that.

Even on unemployment as I am right now, I could still manage to put a little into savings every month if my mortgage were paid off even after taking care of food, utilities, student loan, and cobra insurance.

[WyoBob]

I'd say talk to a number of different professionals: Insurance folks, bankers, personal investors.

And this would be the last thing I'd do. All of these entities make money off your money, a lot of times, without doing any work at all but collecting their commissions. No one has as much at stake in this inheritance as you.

An insurance agent will want to put you into annuities or whole or universal life. If you need life insurance, buy term.

Banker's? Look at the messes they've gotten themselves into over the last few years. When I was in the land/cattle business, I found banker's to be excellent contrarian indicator's, i.e. - do the opposite of what they advise. I also know of several very sad stories of people who's inheritance was completely wasted away buy a consortium of lawyer's and banker's and their fee's for "services rendered".

Personal Investor's? Like Bernie Madoff? Great line of work, though. They make guaranteed money on commissions or through management fees. Whether you make money or not is up for grabs.

The wealth you inherited accumulated over a long time. You don't have to be in a hurry to invest it. Put it somewhere safe and educate yourself to manage your own destiny. That could put you 1-5% or more ahead right off the bat. There are lots of resources out there. You will eventually want to open a discount brokerage. Schwab and Scottrade are a couple that I've done business with for quite a few years. Fidelity and Vanguard seem to have good reputations, as well. At least, when you call your own shots, you'll always know for sure who is responsible for your success.

WyoBob

[madwilliamflint]

Be careful. Remember that "financial advisors" are frequently just salesmen, as are brokers who make commissions on trade activity regardless of whether or not YOU do well. That goes for mutual fund peddlers as well.


If you decide to trade yourself I highly recommend thinkorswim.com (they were just bought by TD Ameritrade but have the best software in the business.) Any reasonable consumer level electronic trading firm will let you sign up for a "paper trading" account so you can get used to their software and your trading strategy using fake cash. Sure, it's not the same as having real skin in the game, but it's as good a proxy as you can get.

Not that I'm recommending trading necessarily.

"Buy and hold" in the equities world is a flat out losing proposition. I'd be inclined to look at fixed income securities (debt instruments and such) with some actual stability to them.

There's a lot of snake oil out there.

[PeteSB75]

The problem with paying off the mortgage is that it generally costs you less to pay the normal schedule than it does to pay it off. Even if your interest rate is 7-8%, once you take the tax deduction off the top, you are looking at 4-6% for that money, so it is very cheap, basically the cheapest debt you, as an individual, will ever have. If you refinanced within the last year or so, make that 4-5% and 2-3%. So, if you throw that money you would use to pay down the house into a mutual or index fund(I'd suggest an S&P 500 index or Russell 5000 Index unless you have multiple millions to invest) and assume the historical average return for the market - about 7% a year, you are making anywhere from 1-5% return on your money over what you would be saving in payments.

Obviously, this is your money and you should do what makes you comfortable. If you feel better about the opportunity cost and owning the house free and clear, do that. But make sure you understand what it is you are choosing and what the alternatives are.

[forgop]

Originally Posted by PeteSB75

The problem with paying off the mortgage is that it generally costs you less to pay the normal schedule than it does to pay it off. Even if your interest rate is 7-8%, once you take the tax deduction off the top, you are looking at 4-6% for that money, so it is very cheap, basically the cheapest debt you, as an individual, will ever have. If you refinanced within the last year or so, make that 4-5% and 2-3%. So, if you throw that money you would use to pay down the house into a mutual or index fund(I'd suggest an S&P 500 index or Russell 5000 Index unless you have multiple millions to invest) and assume the historical average return for the market - about 7% a year, you are making anywhere from 1-5% return on your money over what you would be saving in payments.

Obviously, this is your money and you should do what makes you comfortable. If you feel better about the opportunity cost and owning the house free and clear, do that. But make sure you understand what it is you are choosing and what the alternatives are.

Sure, my mortgage is only 4.5%, but the bigger issue is that my principal balance is down low enough that I may not even have enough interest paid to be more than my standard deduction, thus there's nothing to gain in that regard. On the other hand, if I were paying $10k/year in interest like when I started, I certainly agree with the concept of the tax advantage of the higher deduction.

All told, there will be ~ $515k. Certainly far from wealthy, but enough to get a good start and work my way there. It'll just be a huge piece of mind to put my head on my pillow knowing I'll never have to worry about being homeless compared to what so many other people have gone through.

[BigAl_SC]

When looking for a financial advisor, find one that is fee based only. They charge by the hour like lawyers but make no money investing it for you (most even route you through several independent houses like Vanguard). They will do a whole life analysis the first time. Most large cities have at least a couple. They usually only handle clients with 500k or more. Check references before committing. If they can't give you 5 independent people to call, move to the next one. They will cost more up up front then a yearly review (smaller cost) to check and realign the diversity and changes to life but they aren't trying to hit you for either a % or transaction fee. I don't have that type of coin (wishful thinking) but know of several that do.

As stated before, insurance (commission based), broker (commission based and bonus's for routing you the way the company wants), financial advisors (most are commissioned based). If they are making money by moving yours look elsewhere.

[Ashcan Bill]

Personally, I'm a strong believer in paying off the mortgage as soon as possible. Besides the peace of mind it brings, I can think of a lot of better things to do with that monthly payment money rather than paying it to the bank in the form of interest. The tax savings will never offset the interest payments. Had I not paid off my mortgage early, I never would have been able to retire early.

As far as investment advice, I can't improve on what WyoBob said. One thing does bear repeating though - be very cautious of the "advisers"!

Welcome back to the forums, Duane. I thought you were leaving from what you had said on the other ones? Good to see that some elements of your life have straightened out and you are in a position to reverse some bad things. It's got to feel good to be able to pay off debt and then be able to invest the rest. Good to see those demons get beat down and you back in control.

[Pilon]

Series 7, insurance license, fee based financial planner with designations and a good reputation.