$10,000 windfall - what to do?

[pirate_wench]

So, unfortunately, I am inheriting some money from my grandmother.  It's about $10,000.  I know what I should do...Save it! But I also really, really, want a campervan... Assuming I invest it into a Vanguard Total Stock Market fund instead, should I dump the whole amount in as soon as I get it, or try to dollar-cost average it over this year? Try to time the market?

Thanks for the input.

[pirate_wench]

I forgot to add that I have no debt except a mortgage or two, and I only have 2 months emergency savings.

[Lackland]

I forgot to add that I have no debt except a mortgage or two, and I only have 2 months emergency savings.

Well, therein lies your answer. Why not split it so that you can bolster your emergency fund and advance payment on one of your mortgages?

[Villanelle]

Since your emergency savings is lacking, I'd probably use at least most of it to set up a CD ladder os some kind.  Rates still suck, but it's better than a savings account and in case of an emergency, you will have access to chunks of the money every couple months, at least. 

[Dynasty]

Invest $5000 for retirement.

Save $4000 or so to add to your emergency fund.

$500 or so to spend frivolously...

Better act fast too. Otherwise this money is going to be spent and gone fast!

[Another Reader]

I look at this a little differently.  This money is your grandmother's legacy to you.  I would treat this money a cornerstone of my future wealth and that of my family.  I would invest all of it for the future, including any future generations.  In honor of her thoughtful gift, I would then save up an additional $5,000 for my emergency fund.

[TrulyStashin]

I'd want to know more.  How secure is your job?  How much credit do you have access to if you need it?  You might consider opening, but not using, a HELOC as a backstop to your emergency fund, especially if your job is pretty secure and all you want is a little more peace of mind.

I'd want as much of that money working for me as hard as possible.

When my grandmother was in her late 20's (in the 1950's) she inherited money & stock from her mother's estate.  She invested it -- keeping it separate from her family/ household money -- and by the 1980's those few investments were the bulk of her yearly income.  She lived (pretty well) off the dividends.   As a wedding gift, in 1964 she gave my parents 10 shares of Ma Bell stock which was broken up in the 1980's into 100 shares of Verizon. When I graduated from my MA program, my parents gave me two shares of that same stock.   Somehow, it's meaningful to trace the lineage of some of my current wealth all the way back to my grandmother's self-discipline and savvy investing more than 60 years ago.

[pirate_wench]

Hey guys, I shipped out (I'm a merchant mariner) so am just now getting to read these responses.  Thanks! I have $170K in retirement savings (401(k) and Roth IRA)  I am 32. My job is very unique. I'm trying to get to the point of only having to work 2-3 months a year.  Right now I work 4-5. It is relatively secure, though not "steady".  I just paid of my HELOC, but have access to a $15,000 line of credit through my credit union that I have not touched (i.e. I have zero balance). I have a condo that I plan on selling soon, which will put between $80,000 and $100,000 in my pocket and reduce my expenses such that the 2-month emergency savings (which is now 3 months) will be more like 6 months.

Still interested in what you guys think about dumping that money into a fund all at once, or spacing it out?

Re: TrulyStachin, that's an awesome story about your grandmother!  Thanks for sharing it.

I think I'm leaning towards putting at least $5,000 into the emergeny fund....Thanks

[CrochetStache]

Considering your inconsistent work schedule it may be difficult to time the market as you would like. Whatever amount you choose to put into those stocks, just do it as a lump sum.
The sooner it is in there the sooner it is possible to begin earning returns.

[meadow lark]

It would be fun to keep it separate in some way.  I used an inheritance from my mother as a down payment on my first house.  And we closed on my birthday - so it always felt like a present to me from my mom.

[Villanelle]

If you've decided to invest it, the the most rational option is to lump sum it.  Many people feel weird about that though, so if you want to dollar cost average it, there's nothing especially wrong with that, though I'd do it on a aggressive schedule to get it into the market as quickly as possible.