25 yr old daughter finally getting her car accident settlement, investment advice?

[ezbtr]

She got banged up pretty good approx 18 mos ago, healed up thank God, still has some back issues but stretches out etc. So she asked what she should do money wise. (May college grad) but hasnt found her career job just yet but still at her old job, plenty to support herself.
I said no down on house yet as her credit ok but her income isnt that high, she makes ok money, but a house will have costs, repairs even if a rental, I advised either a Vanguard mutual fund (although taxable) or a 401K which when she needs a house down, she wont get taxed on 1st home purchase and no taxed income). Her job doesnt offer 401K though so she wont have matching. Any ideas or corrections here?
Also can she still be on my work health insurance if she 25 and out of college?
Thanks as always guys

 

[bruceb58]

She can't do a 401k unless she works for a company that has a 401k plan. She can invest in a IRA or ROTH IRA but that is limited to $5,500/year as long as she doesn't make more than the phase out incomes. If she is self employed she can do a SEP IRA also based on how much money she makes.

The first home IRA withdrawal exemption is $10K.

As far as health coverage, normally she can stay on your plan until her 26th B-Day if your plan already covers children.

 

[MTboatguy]

Seriously, I would have her talk to a reputable financial firm and then look at her options.

 

[tpenfield]

Perhaps she could buy you a new boat

 

[robert graham]

Try to sell her on the idea of that money, carefully invested now and for the next 40 years, can provide her with a comfortable retirement fund....get a financial advisor to show her the magic of compounded interest and how much the amount can be worth in 40 years. It'll be awful easy to "go buy a new car" or whatever with her chunk of cash and soon it's just all gone. There's only a few times in a person's life that they have their hands on a nice wad of money and this may be one of her opportunities....Glad she's O.K.....My daughter had a bad wreck at 16....put her in a wheelchair for the rest of her life....she's 42 now and doing fine!....Your daughter is very fortunate!....

 

[thumpar]

I would do the house. We bought ours a few years ago and pay $300 less then the rent was on a smaller house. If you still don't like that idea talk with Edward Jones. I have been with Openheimer, Vangard and now Edward Jones. Some of their fees are a little higher but you get a real financial advisor. Be careful what you invest in if you plan on using the money before retirement age so you don't get penalties.

 

[bruceb58]

Doesn't sound like she has a job that would allow her to afford a house.

 

[salty87]

A financial advisor will start the process by asking lots of questions. The most important is what's the timeframe. Investing that money for 40 yrs is alot different than safe-keeping it for 5-10 before she uses it as down payment. The market is great over the long term but putting it in right now at all time highs is dicey. If she'll need it in less than 10 years it can be a bit of a gamble.

There are other assets classes to think of...real estate, fixed income, gold (lol). Buying the market near the top isn't ideal, interest rates are too low for fixed income, gold...not going there.

Is she in a position to get the house and have a roommate contribute? Interest rates are so low currently it really makes the house attractive. And, as mentioned already, rents are pretty high in many areas making home ownership a possible alternative. Not having a career job does make buying a house a little iffy. Is she in a field where she might have to move for a job?

Figure out what that timeframe is and the rest will start to fall in place.

 

[tpenfield]

I'd be bringing her to a few boat shows at this point

 

[ezbtr]

Doesn't sound like she has a job that would allow her to afford a house.

Yeah I don't think she could qualify on her own yet

 

[ezbtr]

Try to sell her on the idea of that money, carefully invested now and for the next 40 years, can provide her with a comfortable retirement fund....get a financial advisor to show her the magic of compounded interest and how much the amount can be worth in 40 years. It'll be awful easy to "go buy a new car" or whatever with her chunk of cash and soon it's just all gone. There's only a few times in a person's life that they have their hands on a nice wad of money and this may be one of her opportunities....Glad she's O.K.....My daughter had a bad wreck at 16....put her in a wheelchair for the rest of her life....she's 42 now and doing fine!....Your daughter is very fortunate!....

Yeah she is very fortunate! Oh geez how terrible for your daughter glad she is ok as can be though. Mine was hit by a teenage drunk driver and had her college grad delayed by a year as she healed up

 

[rivermouse]

Investment is a very vague term. Most "financial advisers" I have seen talk about what you WILL get many years from now long after they have been paid themselves if you know what I mean.A good tax man who is interested in protecting your assets more than building them with some sorta plan they are into is preferred.

 

[waterinthefuel]

I graduated in finance and investments but I refrain from giving any advice on investing unless asked directly.

 

[bruceb58]

I graduated in finance and investments but I refrain from giving any advice on investing unless asked directly.

Thanks for the warning!

 

[Illinoid]

Most people who call themselves a financial adviser are really salesmen working for a commission for what they sell. I sent my daughter to a fee based financial adviser. Salesmen only have to sell you a suitable product. What she needs is an adviser with a fiduciary responsibility and she should ask to see that in writing...Good Luck!

 

[lncoop]

I'd be bringing her to a few boat shows at this point

LOL. Not giving up on the boat I see!

 

[Volphin]

I think an aggressive mutual fund is in order. At her age, her retirement could be all set by the time she gets there.

 

[Tim Frank]

Given the current world economy, in particular commodity and energy prices, interest rate projections, employment futures, and the political climate... my investment adviser is extremely bullish on lottery tickets.

 

[tpenfield]

LOL. Not giving up on the boat I see!

Nope, it could be the best option

 

[WrenchHead]

Glad your daughter is doing OK. Your advice on Vanguard is sound. I would say go with Vanguard, choose an old conservative mutual fund and do dollar investing. Get in and stay in, ride the ups and downs and tap the account when she retires. Vanguard is a solid company with little or no charges to it's investors. She can do everything herself with a phone call to Vanguard. Check Vanguard out on the net. Stay from a financial advisor.