I inherited $25K and I’m looking for some advice on what to do with it. I’m thinking of paying off all my $5K debt, putting $5K into my savings, spending $1K on things I need, and then investing the remaining $14K.
I’m planning on splitting that $14K into 70% in ETFs and 30% in stocks. For the ETFs, I’m looking at VTI for $9,800 and I’m considering MSFT, META, CVX, PYPL, and maybe one more for stocks. Does this seem like a good plan? I’m not tied to these specific stocks yet, just considering them.
With Trump taking office, do you think I should wait before investing? I’m unsure if the market will react significantly in his first 100 days.
I think your idea of paying off debt and setting aside money for savings is solid. As others mentioned, you should consider putting $7K in a Roth IRA for 2024, and then contribute the rest in January for 2025. You can simplify your investments by sticking to an ETF like VTI instead of picking individual stocks.
I’m considering VOO too, but VTI has a lot of overlap and it’s $250 cheaper. I think it makes sense to buy more shares of VTI. For the $9,800 I’ve set aside, I could buy 32 shares of VTI, or 17 shares of VOO.
@Leif
That’s not how shares work. A $2 stock isn’t automatically cheaper than a $1000 stock. It’s about the value each share represents, not just the price.
@Leif
It doesn’t matter how many shares you buy of either. Both will track their indexes similarly over time. If you don’t study stocks, it’s best to stick with an ETF instead of picking individual stocks. As you’re young, you might want to split your investment into one ETF that tracks the S&P 500 and another for the Nasdaq. Then, in 5 years, balance the funds again. You can expect about 7% to 9% returns annually.
Is your savings account also your emergency fund? Before investing, you should set aside about 6 months’ worth of living expenses for emergencies. You don’t need to invest all the money in an IRA right away. You can contribute the funds, then invest them later. If you’re using a broker, your uninvested money could be placed in a money market fund to earn some interest while you decide where to invest.
Do you have an emergency fund? If not, you should set some aside for that. For your investment, I’d recommend putting it into an IRA, with a 70/30 split of VTI and QQQ.
You might want to DCA (Dollar Cost Average). No matter when you enter the market, it might not be the best time, so you could invest a little at a time. Also, put some of it in a high-yield savings account and get a good interest rate.
PYPL is still a long way off from its 2021 highs, but it’s close to its 52-week high. I’ve taken a 50%+ hit on paper. I own shares in V, MA, JPM, and AMP, and they’ve done well. With Trump back in office, maybe you should invest in MCD and KO… just kidding, but I’ve held them for years.