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What to do with $26,000?

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Retro94
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What to do with $26,000?  Reply with quote  

My Father (46) has recently come into some very unexpected money, about $50,000. Not a lot to some, but for us with an average annual household income of around $40,000, it's a big deal. $24,000 he has put up to pay some bills and provide a "rainy-day" type stash.

He has given me the responsibility of turning the other $26,000 into more money. I've done a lot of thinking and I cannot find any ideas I'm totally comfortable sinking that much money into. I've thought about stocks, starting a business, just keeping it in a savings fund.

The real issue here is I'm 16, and don't really feel up to this task. I've asked a lot of people, and here I'm just looking for ideas and/or advice on what I should do with it. Any input at all would be great.
Post Mon Oct 18, 2010 3:51 pm
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CaliChristian
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Your Father has trusted you will a very large sum of money, so I do understand your reluctance given your age and experience.

You should at least start off by investing in a CD or finding a good savings plan through your bank to generate as much % annual interest as possible. This way you can still be profiting some, while still thinking about what you want to do with the money.

Later on you can start to invest in the stock market, or even real estate. You have been given a very rare opportunity, and glad to see you not wanting to blow it on unnecessary materialistic items. Bravo!

Good luck with your future, and I hope whatever decision you make is the best one for you.
Post Mon Oct 18, 2010 9:02 pm
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Elena C.
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I would definitely stay away from buying stocks. A CD is not a bad idea, especially if you just can't decide what to do with it, because it's very safe.

First of all, maybe your father could put 5,000 into a Roth IRA.

I would probably consider a very reputable mutual fund. I'd probably go with Fairholme Fund (FAIRX). The other thing I'd do is rather than plop all the money into the fund at once, divide the amount you have by 12 and put in 1/12 per month for a year. So if the total you are investing in the mutual fund is $24,000, put in $2,000 per month. Mathematically, this increases your chance of coming out better in the longer run. I got this tip personally from the founder of one of the most successful mutual funds.

Good luck! It's a nice thing your father has done. You're going to learn a lot! Just be very conservative.

The other thing you might consider doing is divide the money into 3 or so "buckets" and try different things with each portion and study the results for the sake of your learning.
Post Tue Oct 19, 2010 1:08 am
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coaster
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I have to disagree with the above. This is too much responsibility; too much ANXIETY for a sixteen-year-old to carry. I think your father is in error in giving you this task. If he wishes to gift you the money outright, and you manage your own money as you see fit, that's one thing. But to task you with managing HIS money in the role of a fiduciary, which if you were of majority age, would be a legally binding responsibilty in that you'd be responsible for any losses, is inappropriate. There are already too many inter-family financial problems in most families without adding this burden. If you can't get out of this, just put in in a CD where it's at least safe.

I have another idea: the very best way to turn this money into more money is to use it to pay for your higher education. Put it in a CD for two years, then use it to go to college. Now, there's a real investment, and worth some real money, too. He'll agree with me when he's in his old age and his kid is a corporate CEO or something. Wink

~Tim~
Post Tue Oct 19, 2010 6:00 am
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CaliChristian
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Well if you disagree with me so much, why did you suggest pretty much the same thing I did. Put it into a CD. We both agree on that.
Post Tue Oct 19, 2010 4:16 pm
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moonraker1
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Just leave your money in the bank and dont think that it exist. You will never know, you might need it for emergency. Investing is good but the economy is very volatile right now. Just stay away from it for awhile until you find a good idea to invest.
Post Tue Oct 19, 2010 6:11 pm
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Elena C.
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I just assumed the father is prepared to lose the money if he entrusts it to his 16 year old. I figured he was writing it off as a life lesson for his son. Otherwise, it is not a good idea.
Post Tue Oct 19, 2010 9:50 pm
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coaster
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quote:
Originally posted by CaliChristian
Well if you disagree with me so much, why did you suggest pretty much the same thing I did. Put it into a CD. We both agree on that.

I disagreed with giving the young person the responsibility for investing the money in the first place. I did not disagree with where to put it.
quote:
Originally posted by Retro94
The real issue here is I'm 16, and don't really feel up to this task.


~Tim~
Post Wed Oct 20, 2010 5:35 pm
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dannysmith
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I'm a great fan of gambling! I totally adore that special type of fun which it gives to me so in my case it became a hobby a long time ago. I even think sometimes that I could be considered as a heavy player but in my case it's mostly that time which I spend to various games, not money because I always control my separate budget for this hobby Yeah, I know my limits and I try not to concentrate too much on money I can win, for me general process of playing is much more pleasant, I think that it's a common thing for many players, maybe that's why it's so easy to become addictive in this case like in case of other types of games too.
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Post Sun May 27, 2018 1:17 pm
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rvalmeeki
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Post Thu Nov 08, 2018 5:29 am
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