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Advice on Investing Large Injury Settlement

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dhgodo
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Advice on Investing Large Injury Settlement  Reply with quote  

Recently I was in a fairly severe auto accident that has resulted in a settlement of around $210,000 (after medical/property damages were covered). I am 25, married with no kids. My wife and I just bought our first home 2 months ago. At this point, we have a combined debt amount (mostly student loans and a truck note) of $32,000. Other than that, our only obligation is our new mortgage.

We live fairly comfortably as it is. We both have solid jobs and solid income. Accordingly, I would prefer the majority of this amount to be applied towards some type of back-end investment (retirement, etc), but am a little out of my league at this point. I have had various people suggest paying off my mortgage entirely, while others suggesting I can get higher returns investing elsewhere.

Regardless, this is a rare opportunity for us as a young couple to really solidify our family's financial future. Looking for any and all (reasonable & unbiased) advice! Thanks in advance!
Post Mon Jul 01, 2013 4:22 pm
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oldguy
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quote:
I have had various people suggest paying off my mortgage entirely, while others suggesting I can get higher returns investing elsewhere.


The longterm history of the generic stock market is 11%/yr, averaged over 30 year blocks of time. SO, when you are age 55, your $210,000 should be about $4,800,000. And your mortgage will also be paid-off the interest cost will be about $150,000. I wiould definitely pay the $150k for the chance to earn the $4.8M.
IMO, the US mortgage provides some of the lowest cost, longest fixed rate terms, of any capital in the world. Very Happy
Post Mon Jul 01, 2013 6:56 pm
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dhgodo
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Thanks for the advice! Many others have suggested the same route
Post Mon Jul 01, 2013 7:08 pm
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Publius
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Just to expand on oldguy's advice, you also want to consider your rate. If you just bought the house, you are likely in a very good mortgage, but if it is 5%+, you might want to consider refinancing and locking in a 30 year fixed rate. If you have to pay down a little bit of the principle to make this happen, I would use some of your windfall to do that. This is particularly true if you didn't put down enough on the home to avoid PMI, and especially if your mortgage is an ARM. Rates are at historic lows and have nowhere to go but up over the long term, so if your rate is adjustable, I would lock in a low rate on a fixed conventional mortgage now.
Post Tue Jul 30, 2013 8:25 pm
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jallyjames
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Great post. I really enjoyed what you had to say, and more than that,how you presented it...
Post Wed Jul 31, 2013 10:39 am
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CraigEGI
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Re: Advice on Investing Large Injury Settlement  Reply with quote  

quote:
Originally posted by dhgodo
Recently I was in a fairly severe auto accident that has resulted in a settlement of around $210,000 (after medical/property damages were covered). I am 25, married with no kids. My wife and I just bought our first home 2 months ago. At this point, we have a combined debt amount (mostly student loans and a truck note) of $32,000. Other than that, our only obligation is our new mortgage.

We live fairly comfortably as it is. We both have solid jobs and solid income. Accordingly, I would prefer the majority of this amount to be applied towards some type of back-end investment (retirement, etc), but am a little out of my league at this point. I have had various people suggest paying off my mortgage entirely, while others suggesting I can get higher returns investing elsewhere.

Regardless, this is a rare opportunity for us as a young couple to really solidify our family's financial future. Looking for any and all (reasonable & unbiased) advice! Thanks in advance!


I think an ideal investment for some of your funds would be in a gold IRA. Over the years, gold has provided to be a reliable investment option and definitely provides investors with a remarkable platform to enhance the growth of their wealth in the long run. If you already have an individual retirement account even better, you can add gold to it.
Post Tue Oct 15, 2013 4:25 pm
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oldguy
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"""" Over the years, gold has provided to be a reliable investment option and definitely provides investors with a remarkable platform to enhance the growth of their wealth in the long run."""

It depends on what years you pick. In about 1980 (one career ago) gold was about $1000 and the Dow was about 1000. Now gold is about $1600 and the Dow is almost 16,000 (10X better than gold). So I've glad that I didn't pick gold when I was young. Very Happy [/quote]
Post Tue Oct 15, 2013 9:42 pm
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