Submitted by JGreenAZ t3_yia3m6 in personalfinance
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Comments
wilsonhammer t1_iuiogkh wrote
this is the way OP. investments are a good plan (follow the flowchart, read the wiki), but make sure your day-to-day financial habits are rock solid. you can't build on your nest egg on an ongoing basis if you don't have money leftover each paycheck to save.
also, I can't no one has said this yet, but money from lawsuits/settlements are taxable. make sure you have enough set aside come April to pay uncle sam.
oscarwinner88 t1_iujf418 wrote
Sometimes it’s taxable and sometimes it’s not, it depends on what type of settlement it is. OP, you should ask your lawyer to give you information in writing about which (if any) portions of your settlement are taxable.
rollergo11 t1_iujfemf wrote
If OP doesn't have a car, a good, used, reliable car for 6-10k would do wonders for them in terms of mobility and getting to/from work. If they do, pocket that shit and tell noone
Weazy-N420 t1_iuj3kau wrote
Definitely pick one!!
LiveWire_74 t1_iuii2xm wrote
Take these people’s good advice my man! I came into $112k just about five years ago. With the exception of $10k for my kids’ 529 college plan, $6k for my Roth IRA, and finally $30k for down payment of my condo, I pissed it all away. Roughly $60k just disappeared because I didn’t have a plan.
Booz-n-crooz t1_iuiwjnj wrote
Insane how money evaporates if you don’t keep both eyes on it 😭
LiveWire_74 t1_iuj7oow wrote
Yeah. Evaporates is definitely the right word.
Skinkies t1_iuje61o wrote
Mine evaporated due to shitty rent in a desperate situation, had 18k saved up, had to get an apartment asap, and waited too long to start working again. (I was actively looking but had to wait due to family.)
bsnimunf t1_iuji4t2 wrote
Although it's obviously gutting you wasted 60k you actually didn't do that badly. I bet in 90 percent of these scenarios the people receiving the money blow the lot. You saved about half and learnt a lesson, that counts for something.
brock_h t1_iuiggv6 wrote
Here's a fun fact for you. If you took that $90K now at 26, invested it in a total stock market (or S&P500) index fund returning 7% per year on average (and compounding annually), and left it until you're 56 WITHOUT EVEN ADDING ANY ADDITIONAL MONEY, you'd have around $700,000 at that time. That's a good start for your retirement money. Best to not spend it since you have a job that can pay the bills. You can treat yourself from your wages.
ArdenSix t1_iuj56zz wrote
That's insane, I can't wait to start stacking my brokerage account next year
lrrc49 t1_iuj7b1g wrote
Now imagine investing that into an etf that pays a dividend!
poe_todd t1_iujcwch wrote
I know! You'd have even less money! The tax drag alone pretty much guarantees that.
lrrc49 t1_iujeb9c wrote
In what world do you live in that getting paid a dividend results in you having less money? Yeah you have to pay income tax on but its still a fraction of what you make.
All my dividend paying funds are doing better than index funds and I get paid every quarter on top of the returns. but sure invest in index funds that are still heavy on meta and Tesla lol
cholley_doo2 t1_iuhm8xe wrote
open a Roth and put in the annual max right now, and do the annual max again after first of the year .
setup an emergency fund with 9 month of living expenses.
max out you employer retirement offerings
twentyhands t1_iuiiube wrote
Allocate the funds as well. Too many times I’ve seen people on this sub complain their ROTH “doesn’t appreciate”, but it’s just been sitting in cash-equivalents for 10 years.
monkeybids t1_iuiam73 wrote
Lots of good advice coming in the comments.
Conceptually, the best thing you can do is protect your money from yourself (like you mentioned about wasting it slowly). That means socking it away in places where you no longer have it and it works for you, like Roth/401K/I bonds. That also means NOT changing your lifestyle: no new credit cards, no change in entertainment habits, etc.
You probably already know this, but I would also highly recommend keeping news about the settlement to yourself.
beleafinyoself t1_iuip24w wrote
Don't be flashy with the money and don't tell anyone about it, not family, not friends. It's no one's business but yours. A lot of financial skills boil down to discipline. It may sound simple, but it's not easy. People tend to think it's about just about being careful how you spend, but it also extends to your personal relationships. Be careful who you get close to in life and get legally bound to. The fastest way I've seen people hemorrhage money is through a relationship with someone unscrupulous or financially illiterate. Or with some kind of addiction issues.
I'm happy with my Roth IRA through Vanguard and target date funds.
26 is young, your whole life is ahead of you. Stay healthy and good luck moving forward
PetraLoseIt t1_iui93dz wrote
You're a year younger now than I was when I started getting more serious about my finances. So you're ahead of me in that regard.
I agree with others to open a Roth IRA. I'd do it with Vanguard, but Fidelity or Charles Schwab also are good options. Then put $6k in there for 2022, and when January 2023 rolls around put in $6500 for the year of 2023 (the maximum limit is going up by $500 for 2023).
Once money is in the account (the IRA is an account type), you still need to invest the money. If I aim for 40 years from now (when you're 66 and hopefully still healthy and alive), then I'd go for the target date fund of 2065 (okay okay, that's 42-43 years from now). For Vanguard that would be the Vanguard Target Retirement 2065 Fund, VLXVX for short. For Fidelity it would be the Fidelity Freedom® Index 2065 Fund Investor Class, FFIJK for short. The word index is important here because it means it's investing in indexes with low costs which is good and also the words investor class are important to get to the fund that let's you start with a "low" investment amount below 5 million). For Charles Schwab it would be the Schwab Target 2065 Index Fund (again: the word index is important).
Charles Schwab and Fidelity also have target date funds that are actively managed. They don't have the word "index" in their title and cost more but probably won't bring more profits. Hence my advice to go for the "index" variants. Vanguard's target date funds are always comprised of index funds.
blueyork t1_iuimemz wrote
I also recommend a target date mutual fund. It gets you into an age-appropriate mix of stocks & bonds, rebalances occasionally, and the fees are low if you go with Fidelity or Vanguard. It's a good hands-off fund.
ShinjukuAce t1_iuinshe wrote
Index funds are a good idea, from companies like Vanguard. It’s a fund that just owns a tiny piece of 500 or 1000 different companies, so it basically goes up with the stock market and you don’t have to worry about picking individual stocks from specific companies that might go up or down. The stock market has always been a good long-term investment.
Do not invest in bitcoin or other crypto - it’s all a scam.
cholley_doo2 t1_iuhrbwv wrote
congratulations BTW,
avoid debt.
research boggleheads for investment strategy and Dave Ramsay for beginners steps in money management .
madmoneymcgee t1_iujafy6 wrote
Things to consider:
- Education: if you haven't had the chance or opportunity to go to school or get some good job specific training now is a good opportunity. It's hard to quantify in some ways but investing in your self in this way can pay off very well over time (compared to your current job).
- I don't care why you went to prison but now that you're out you may want to use some of this to pay a lawyer what it takes to expunge your record so it can be easier to apply to jobs in the future if they ask about felonies).
- Beyond that, follow the flow chart here. Make sure some is put away for emergencies and then when it comes "investing" make sure you're investing in tax-advantaged accounts that will help in the future. If your job offers a 401k it might make sense to put as much of your pay from now until the end of the year into that and use some of this to pay for the day to day expenses your salary usually covers. But for that to be a good idea needs more info overall (what your job is and the benefits they offer, what your monthly expenses are, etc)
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[deleted] t1_iujibgq wrote
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Werewolfdad t1_iuhlywz wrote
quantomflex t1_iuisjf6 wrote
Your 26….invest it in an index fund and don’t touch it for 40 years! Seriously….Your future self will thank you.
reyesg68 t1_iuj7o3f wrote
90k is a years worth of work for me. Hold on to it get a job any job. Labor unions hire ex felons I should know. Reformed con now I’m a union labor pushing 90k with OT. I’m not rich but me and my family are happy. Save it purchase what u need to be productive (vehicle, apartment, work clothes) stay busy get two jobs bro I worked two jobs when I got out the pen. Grind hard bro people like use have to dig ourselves out of a hole luckily for u are a step ahead with 90k good luck!
V_I_I t1_iujej7f wrote
Ik a girl who got 60k from getting hit by a car and blew it in a year
Now she has no car, no house, and struggling to survive working at burger king
VERY_STABLE_DOTARD t1_iui0ney wrote
What were you in jail for? You may get sued for restitution.
JGreenAZ OP t1_iui1ac6 wrote
naw my legal stuff is wrapped up, and this was 100% non related, they cant mix the two together, and it was for drug sales, and other drug related charges
t0astter t1_iuios8q wrote
Financial order of operations. Build your emergency fund, 401k, Roth IRA, then invest the rest in a taxable brokerage account. I'd recommend looking at what's called a two-fund portfolio, made up of a US domestic total market index fund and an international total market index fund. Dollar cost average your $90k into those two and you'll be set!
1live4downvotes t1_iujeb5y wrote
Key word my friend "windfall", I highly recommend looking this up. Not to kick the bucket, but the resources you can find after googling "windfall" will give you great advice.
Stiles777 t1_iujfcm0 wrote
Use it for a down payment on a house. If you're already a homeowner, use it to make a principal payment.
TheLastDumpling t1_iujhulj wrote
My guy went to prison and still came out better off than most people who went to college.
[deleted] t1_iujibmt wrote
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ElysiumSprouts t1_iuht68r wrote
Many people suggest maxing out ibonds investment currently (That's 10k for the year) and after 12 months you can consider it part of your emergency fund.
Also max out your employer matched 401k (if eligible) and/or the 6k IRA for the year.
[deleted] t1_iuiqpc1 wrote
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Drew0223 t1_iuiux1b wrote
Vanguard roth ira… max it. Lots of good mutual funds to pick from.
HoneyManu t1_iuj48u9 wrote
Put it in an index fund and forget about it for a few years.
lrrc49 t1_iuj75v3 wrote
Buy your Max amount of i bonds, max out a Roth, and invest the rest in dividend paying ETFs.
Gyshall669 t1_iujfv66 wrote
Might not be the best idea to invest in a Roth when you have a windfall since the windfall is counted as income usually
ThatsBetrayalDude t1_iuj76ka wrote
What is the difference between an index fund and a TSP’s ‘high risk’ funds like the Sfund?
Sorry not trying to hijack just wanna know if I’m not being as smart with my money as I could
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Grenachejw t1_iuj62cd wrote
$90k before or after taxes?
djmooseknuck t1_iuhlzwk wrote
In my opinion: 90k isn’t really enough of a sum to be life-changing retirement money if you aren’t supplementing it throughout your career.
I’d be inclined to start a business with the money.
nowthatswhat t1_iuhsagw wrote
You shouldn’t really open a business unless you can do whatever the business would do better than everyone else out there.
djmooseknuck t1_iuht7dn wrote
That’s about as close to crap as you can get
You live in a city with more than one rapid oil change location, I’m sure
Same goes for pretty much every other business
You can be the 50th best accountant in the state and still be vastly more successful than a W2 CPA who is way better than you at the work
Business is about margin and market, being “good” is not required. You can ask professional buyers who their preferred suppliers are for mission-critical orders — it is almost never the best in the business, instead using the biggest in the business
Ppl with no business experience love chiming in this crap lol
nowthatswhat t1_iuhwl1t wrote
I opened and closed my own business, I’m trying to save this guy the money I lost doing it.
djmooseknuck t1_iuhxjpp wrote
I started and closed my first three businesses before I hit on a successful venture. Now I have three successful ventures and I’m buying a fourth that will complement them.
Opening a business is the only way to have a secure future. Anything else relies on the goodwill of an employer
nowthatswhat t1_iuhyqau wrote
Employment doesn’t require “good will” on either party’s behalf, it’s a mutually beneficial relationship, much the same as the relationship between a customer and a gender except much more stable.
djmooseknuck t1_iuhyuon wrote
Tell that to the hundreds of thousands who experienced job cuts this year
Meanwhile, my businesses haven’t fired anyone, and I’ve actually grown this year
nowthatswhat t1_iuhzy9s wrote
Most business have grown this year, unemployment is at a record low.
djmooseknuck t1_iui00zp wrote
I can see now why your business failed.
nowthatswhat t1_iui05ty wrote
And I know why even more of yours failed
djmooseknuck t1_iui0i7o wrote
And yet one of us gave up and projects their failure, the other kept going and hit the American dream….
Fascinating
Teeroy_Jenkins t1_iuj7izz wrote
Nah my friend. This is a thread about a guy who just got released from prison asking for advice about what to do with 90k he just came into. You came in here preaching about how he should just start a business and talking it up big time.
You didn't come here to give him advice. You came here to talk up how you 'hit the American dream'. And that is the issue peeps took with your points.
djmooseknuck t1_iujf3gg wrote
I gave him advice, advice that he appreciated, and someone came up in here wanting to trash talk business ownership because he failed at it
I think you missed the mark somewhere
OneAdvertising9821 t1_iuias8k wrote
> Opening a business is the only way to have a secure future
If this is your mindset, it's safe to say that any other option is de facto ignored.
djmooseknuck t1_iuibb1t wrote
I don’t ignore other options. I still have a W2 job, but I have created other income sources because I’ve been an employee for a company when entire states are cut from their footprint — despite being a high-producing employer in a high-producing office
OneAdvertising9821 t1_iuiblf8 wrote
> I don’t ignore other options.
"Opening a business is the only way to have a secure future"
djmooseknuck t1_iuibuni wrote
You’re purposely being disingenuous towards the character of my statement.
If you just wish to nitpick, go elsewhere.
DevilsAdvocate77 t1_iujetgl wrote
Opening a business relies on the goodwill of customers.
djmooseknuck t1_iujeygu wrote
Employment equally depends on their goodwill. That’s like saying both require oxygen in the environment; does not add anything to the conversation to mention because both require it.
DevilsAdvocate77 t1_iujfc69 wrote
You said "opening a business is the only way to have a secure future".
I'm saying it's no more or less secure than employment, because they both depend on the goodwill of others.
djmooseknuck t1_iujfmq5 wrote
One future depends on the goodwill of an employer, which has repeatedly been demonstrated to be fickle — especially in recent months
The other depends on society collapsing. If that happens, nothing you do matters, so why even prep that scenario?
DevilsAdvocate77 t1_iujfsrh wrote
The market for labor will survive longer than anything else you could possibly sell
djmooseknuck t1_iujfwdb wrote
If you truly believe that to be true, then owning the business is unequivocally the better decision
nowthatswhat t1_iuhxxn2 wrote
I’ll expand a little bit. Your whole post is nonsense so I’m going to ignore it and pretend you wrote a better post and reply to it instead.
If you are an accountant, an IT professional, a lawyer, dentist, etc with 10 years exp, yes starting your own business might make sense, if you are just a guy with no particular skill or experience who has a bit of money, starting a business is a terrible idea. First off what will your business be? I doubt you’d randomly decide to go into business producing commercial latex or something not would $90k be enough to do it. You have experience shopping and eating so you’ll probably decide to open a restaurant or retail shop, both are INCREDIBLY difficult to run, and for this reason have HUGE failure rates.
JGreenAZ OP t1_iuhz1x4 wrote
both of you have been help actually and appreciate it! this post especially.
djmooseknuck t1_iuhypca wrote
I am 27 years old
I own a race horse boarding facility, started and sold a marketing agency ($300k exit after 18 months operation), I bought a small used car lot two yrs ago, and I’m in the middle of a $5MM acquisition of a wholesale lumber mill.
On top of all this, I’m a full time account manager for a logistics brokerage
I had no experience with the businesses I am in, I have no degree, I had no mentors
Just the same access to the internet that you and OP have
I also did it all without $90k to start. In fact, I was homeless at 19 and lived in my sunfire
Just because YOU failed and gave up doesn’t mean OP should allow you to project fear on their goals
OneAdvertising9821 t1_iuibc2l wrote
> Just because YOU failed and gave up doesn’t mean OP should allow you to project fear on their goals
They are not OPs goals though, they're yours.
nowthatswhat t1_iuibjrt wrote
who tf asked?
djmooseknuck t1_iuic2xs wrote
You began a little spat. I have provided my resume on the subject matter (starting a business)
How you choose to be affected by that is your own prerogative
nowthatswhat t1_iuid29l wrote
I chose not to care
[deleted] t1_iuhvrqi wrote
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DifficultEbb4 t1_iui48gh wrote
Money is not the only ingredient to creating a successful business. Most businesses fail. OP has already said they have a great job that covers all their expenses. 90k in the market for 20 years could be his retirement $, easily.
I agree the whole “don’t open a business unless you’re the best” also makes no sense, but that’s something you two have in common.
JGreenAZ OP t1_iuhm993 wrote
yes i know its not life changing retirement money, hence the job still. and yes, ive thought of that, but i was looking for suggestions in more detail, like what kind of businesses are easier to start up? or why i should do this kind of business, etc. sorry if i wasnt 100% clear.
Dunbagin t1_iuixe37 wrote
A business that you could get into is hair. That 90k could fund your barber school and get you into a solid business with no real chance of going away. You also get to interact with people and gain a trade that will allow you to work towards bettering yourself.
Just a thought… but could be great for you with the charges, etc.
djmooseknuck t1_iuhmeyy wrote
It’s a far cry from this sub’s capacity to be a great resource on starting a business — start with a real, to-the-bone self-analysis and see what you’re good at, what you enjoy, and find where they intersect
JGreenAZ OP t1_iuhmja6 wrote
hmm.. okay that makes sense, appreciate that.
flerchin t1_iuibsrw wrote
You're not rich. Tell no one. You can't afford to be giving people money or buying your mom a car. You can't really afford to buy yourself a car. You won't be getting $90k like this again, so you need to save it. If you scrimped and saved your whole life, up to $90k, you wouldn't spend it, you'd keep saving. That's what you need to do.
The investment advice so far here is not bad, but having been poor for almost all my life, I know what you're going to struggle with, and it's not which mutual fund to pick (but you do need to pick one!)