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About to receive a large settlement. What to do with the $$?

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skitt1234
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About to receive a large settlement. What to do with the $$?  Reply with quote  

I have always been broke... living paycheck to paycheck... but I am about to get a $150,000 settlement. This means that I'll be debt free with about $130,000 left. I want this monry to last. What is the best thing for me to do? I know nothing about the regular investing stuff... stocks, bonds, etc... besides, isn't 1 hundred grand not enough really to invest to make me any significant amount of money? I don't know...

Should I start a small business, maybe? What do you think?
Post Fri Feb 04, 2011 11:44 pm
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oldguy
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quote:
I have always been broke... living paycheck to paycheck... but I am about to get a $150,000 settlement. This means that I'll be debt free with about $130,000 left.


It depends partly on your place in life - young, old - employed, unemployed. A long life potential - or you're age 70 on SS?

The most common way to fail is to break up the settlement and scatter it by paying off bills, debt, getting a newer car, etc. The average lottery winner (who has never handled money) will be broke in 7 yrs.

First, I would avoid splitting off $20,000. Second, I would avoid starting a business, the urban legend is that you need a business to become wealthy - in real life 85% of business start-ups fail and leave the owner with huge debt.

I would invest the $150,000 in a Target Fund at one of the two major no-load fund companies (Vanguard or Fidelity). Historically, $150k grows to $1,200,000 in 20 yrs, $3,400,000 in 30 yrs, $9,800,000 in 40 yrs. So it's a matter of age and how long you want to wait.
But remember, if you peel off $25k or $50k, it really cuts into the $1,200,000.
Post Sat Feb 05, 2011 12:31 am
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skitt1234
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I'm 40 years old and unemployed. Haven't been able to find work. So knowing this, how would you recommend I start growing it?
Post Sat Feb 05, 2011 3:32 am
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coaster
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Agreed with the above, to the tune of about 96%, as I'd suggest "peeling off" about $5K, just to treat yourself to something as a reward for NOT blowing the REST of it. It's sort of a psychological thing. I think you're more tempted to use more of it, than if you can tell yourself you took your own "cut" up front already, and the rest is for the future. Yes, you lose the growth on that small part, but if it serves to help retain the larger part, then it's worthwhile.

Don't "blow" your whole $5K on necessities. Wink
Post Sat Feb 05, 2011 7:38 am
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oldguy
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I wonder what the OP did 7 years ago?
If he put that $150k into the SP%)) Index Fund he would have $341k today. Very Happy
Post Thu May 10, 2018 2:40 pm
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