Financial Planning for a Sizable Windfall?

Financial Planning for a Sizable Windfall My friend & her husband, ages 38/48 will soon be coming into a large amount of money (6 figures) when they sell the family farm & land he is a partner in. She has asked me how they can live off the Interest of the money they will be receiving and I am unsure what to tell her. They are both below average intelligence and have no experience with investing other than a bank savings account.

However, they are smart enough to be aware of this themselves and know enough to ask for help. I would like to be able to give them plain, straight forward advice, in simple to understand language, such as do A-1-2-3 then B- 1-2-3 then C-1-2-3They have no financial advisor or accountant and the man's sister does their taxes, but she cannot offer financial advice, nor should she. I'd like to come up with a simple plan they could follow themselves and understand, as they would be easily duped by outsiders smelling an easy victim.

Any ideas? Thanks in advancegarusll Asked by garusll 52 months ago Similar questions: Financial Planning Sizable Windfall Business > Financial Planning.

Similar questions: Financial Planning Sizable Windfall.

If you really care for them... schedule a meeting with a licensed professional investment advisor - with you in attendance. The situation begs for professional advice, not the off-the-cuff ideas that we on Askville - with the best of intentions - may generate. The meeting may cost a few hundred dollars... or may not... but will be well worth the cost and will reassure these two people that they're acting smartly... giving free advice from Askville is not what they need.

Please seek a professional and all sit together. You want (I hope) for them to take accountability for the long term... and that will be a great first step... :) good luck.

Do not give advice yourself Do not try to give answers concerning financial issues to friends. They may not be friends for long. Banks and credit unions offer "free" advice with their financial planners.My bank (LaSalle) does.

I took advantage of this because it can be overwhelming to figure out by yourself. And once you think you've figured it out, everything has changed. LaSalle invested the money for me, and they charge something like .30% every quarter.

You can buy individual stocks, mutual funds, CD, savings accounts, or whatever you want. You can view your portfolio, buy stocks, or sell stocks online. You can also set it up to buy/sell when it reaches a certain price.

The planner will meet with you every quarter to go over things in your portfolio. Of course, the planner is looking at your portfolio more than every quarter.So far, so good. I didn't think this was a bad deal, because I needed to pay somebody to invest the money because I had no time to investigate matters myself.

The longer I procrastinated, the longer I was getting 4% in some stupid savings account..

Bonds and safe stocks Your friends can get more money from this sum by investing in securities than they can by putting it in the bank. In either case, it may not be enough to live well on - there are lots of six figure numbers. If I had only $100,000 to live on for the rest of my life (with my wife and child), I would be worried.

This being said - if your friends are primarily interested in income, they should invest the money in a combination of high grade bonds and dividend-paying stocks. As they do not want to deal with trading and managing the securities themselves, they - or you - should look into mutual funds that follow these investment strategies. Most funds are rated as to risk and return, and Morningstar is a good place to start comparing alternatives.

morningstar.com gh grade bonds pay interest at a higher rate than banks and government securities. These bonds are usually issued by major companies with solid financial footing. Bonds are graded according to risk.

Low risk bonds pay the least interest, and high-risk bonds, or "junk bonds" pay the most, but you can lose your money if they default. Electric utility companies have long been a safe investment for people who want income from their investments. Stocks in these companies pay dividends that can also result in more income than what you would get at a bank.

Finally, there are annuities. These are insurance products, issued through insurance companies, that promise a given level of life income in return for paying a premium. There are many types of annuities, but your friends would be looking at an immediate annuity, i.e.

, one that pays right away. From a reputable company, this kind of instrument provides the most trouble free income, but it probably isn't right for your friends. It's more of a retirement instrument, and generally regarded as a supplement rather than a primary source of income.

The rate of return on investment is usually less than what you can get from other sources. Payouts are lower for younger annuitants because their life expectancy is longer than someone who is old. Finally - investing is very complicated, and the forest is full of wolves.

Your friends should keep their money in a safe place, like a short-term CD, if they are not ready to move on something more permanent. It might also be in their best interests to continue to work, and keep their kitty invested for growth. The longer you can put off taking income from your investments, the better off you will be.It's what I would do, anyway.

Sources: LOMA courses .

Go to Vanguard Immediately! Tell them to call Vanguard Brokerage Firm immediately 800-997-2798. If they aren't money savvy, they need to go somewhere thats (1) not going to take advantage of them (2) not have them pay unnecessary fees.

Hope that helps. Also, they should pick up Ernst & Young's Personal Financial Planning. Sources: vanguard.com, Ernst & Young Financial Planning Guide The_Baron's Recommendations Ernst & Young's Personal Financial Planning Guide (Ernst and Young's Personal Financial Planning Guide) Amazon List Price: $19.95 Used from: $10.95 Average Customer Rating: 5.0 out of 5 (based on 14 reviews) Ernst & Young's Retirement Planning Guide , Special Tax Edition Amazon List Price: $22.95 Used from: $1.99 Average Customer Rating: 5.0 out of 5 (based on 1 reviews) .

1 I'll also add they own their house with mortgage paid off, have no outstanding loans other than a used pickup truck payment, do not use credit cards, have no kids. They have no retirement plan. The wife has medically-uncontrolled epilepsy, so employment for her is not an option and I think the husband would rather live off the money than work.

S only job has been the family farm. He has little education and no training other than farming and is low intelligence with poor reading skills and is socially unspohisticated. I'd like to have a better idea of the amount of cash they will be coming into, but I do not.

I will guess mid-six figures. They will also have to consider the subject of Taxes. At the moment I am helping them on Group Health Insurance Transition, since they will be dissolving their farm partnership.

The husband won't collect Social Security for 14 more years, and if he retires without employment income now, he will not be paying into Social for those 14 years. Very complicated, and I feel for them, since I know there are people out there who would love taking advantage of them without a 2nd thought.. and once the money's gone - it's gone.

I'll also add they own their house with mortgage paid off, have no outstanding loans other than a used pickup truck payment, do not use credit cards, have no kids. They have no retirement plan. The wife has medically-uncontrolled epilepsy, so employment for her is not an option and I think the husband would rather live off the money than work.

S only job has been the family farm. He has little education and no training other than farming and is low intelligence with poor reading skills and is socially unspohisticated. I'd like to have a better idea of the amount of cash they will be coming into, but I do not.

I will guess mid-six figures. They will also have to consider the subject of Taxes. At the moment I am helping them on Group Health Insurance Transition, since they will be dissolving their farm partnership.

The husband won't collect Social Security for 14 more years, and if he retires without employment income now, he will not be paying into Social for those 14 years. Very complicated, and I feel for them, since I know there are people out there who would love taking advantage of them without a 2nd thought.. and once the money's gone - it's gone.

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Is there an advantage to doing your financial planning at a bank like harris or is it better to go with edward jones or.

I am planning a financial capital campaign kick off event for 130 people. What light foods should I offer w/ iced tea?

Write 5 sentences about the role of education in successful financial planning, in which you correctly use a different.

Five sentences about the role of education in successful financial planning using different verb tenses.

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