Author Topic: Please Help! How to invest and minimize taxes!  (Read 2108 times)


  • 5 O'Clock Shadow
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Please Help! How to invest and minimize taxes!
« on: August 02, 2014, 05:25:55 AM »
Hello Fellow Mustaschians!

I would love your advice.

I am 27 years old making about $33,000 annually.  I have no car and have a decent credit card debt of around $5000 (~12.9%.)  The only other expenses I have are my phone bills and apartment ($1550/month that I split with my gf).  I don't have a roth or a 401 k as I just got the job about 3 weeks ago so that didn't kick in yet.  We just got the apartment and we don't know exactly how much more the utilities will be so we also have to plan for that.  We've been living with family for a while and now making the next step to getting our own place.  I only have a savings of only couple hundreds of dollars and have about $1200 in betterment so far.  We are very frugal as we don't spend unnecessarily.  We spend most on groceries and occasionally eating out once or twice (~$10-15/person).  Hopefully within the year I'll be able to hit my goals at work and get couple raises which would help as well that would hopefully push my income to ~$40000/year +   

I will be inheriting around $54000 from family and I would love to know your advice on how to best invest it.  From reading the blog, I was thinking about splitting it among a high interest online savings, vanguard stock market index fund and vanguard reit for sheer diversification purposes.  What do you recommend?  I would love to invest/save most of it and want it to grow in the best way possible.  I was also interested with the conversations between betterment and vanguard in terms of fees and expenses and wanted to know if it would be better to withdraw all from betterment and put into vanguard.  As for the credit card, I was thinking about paying it down with my salary instead of using the inheritance for that.  I really just want to invest most if not all of it.

Second question.  How much taxes would I have to pay for the inheritance?  Is there anyway I can minimize that or avoid it?  And by inheritance I mean a check for the aforementioned amount.

I would love to retire as fast as possible and grow my investment hopefully to six figures in the future by being smart with my money.  I use Schwab for my online checking and i'm in the process of opening up an online savings.  My traditional brick and morter bank is hsbc.  We will be probably be living in the apartment or another around the same monthly for the next several years as the priority right now is all about saving and investing.


  • Magnum Stache
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Re: Please Help! How to invest and minimize taxes!
« Reply #1 on: August 02, 2014, 11:35:02 AM »
The good news:  The inheritance is likely tax free to you!  If you are just getting a check from the executor or estate that is your share of her estate (liquidation of house, bank accounts, personal property, etc.) then you'll owe no tax.  (Well technically you might owe a small amount on any gain from her date of death to when the funds are disbursed.) 

Only if you're getting an inherited IRA will you owe income taxes when you take the money out of the IRA.  You don't need to do it all at once, but at least a minimum withdrawal based on your life expectance using IRA tables. 


  • Bristles
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Re: Please Help! How to invest and minimize taxes!
« Reply #2 on: August 02, 2014, 02:37:15 PM »
There are 5-6 states that charge an inheritance tax so you'll want to do an online check.

I would personally look at the 3 fund allocation on Bogleheads (Vanguard Total Stock, Intl Stock & Int. Bonds).