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Author: donnab100 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75379  
Subject: inheritance Date: 1/28/2000 1:50 PM
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okay! if you get a 200,000 + (not to much more +) fairly large inheritance (large for normal people) what do you do with it to get out of a government job that your making ~40,000 in and have 18 years left, but your in your 40's and want to get the H out in no more than 7 years and want $50,000 a year to spend and enough more to buy a $200,000 plus house on the water.
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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18393 of 75379
Subject: Re: inheritance Date: 1/28/2000 3:20 PM
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The short answer is invest it wisely and hope it grows to something large enough for your needs.

Fools generally tell you the max payout you can expect from investments if you want them to last your lifetime is 4 to 5%. So if you have no other income from pensions or social security, you need investments beyond your home of something like $1.25MM.

You want your 200K to grow to $1.25MM + 200K for the house or $1.45MM. That is a 7.25 fold increase in 7 years. Thats a compounded rate of 33%/year.

Its possible but Fools think the S&P Index can be counted on to return only 12% on the average.

So put your money in stocks and manage them for growth. The odds are you will not achieve your goal, but maybe you will get lucky. You may wind up having to extend your work life, reduce your expenses after retirement, increase your rate of saving, or working part time after you retire. Work through the Foolish retirement planner for more ideas.

I would say go for it. You will probably come closer that way and perhaps along the way your needs will become clearer or other possibilities will open up for you.

Best of luck.

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Author: JABoa Big gold star, 5000 posts Feste Award Nominee! Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18396 of 75379
Subject: Re: inheritance Date: 1/28/2000 3:59 PM
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donnab100, marry a rich man.

Suppose that $200,000 grows at 15% and the house on the water grows at 10%. So you have $532,000 from the inheritance and the beach house is $390,000, in 7 years. But your $332,000 gain will be hit with 20% capital gains tax, leaving you with $265,600 profit, so you are on the beach with a house, a view, and $75,600.

Now, suppose you get the H out in those 7 years and you are 55. I don't know what the actuarial rules are for your pension, but let's suppose that at age 55 you get 75% of what you would at 65. This is typically 60% of your final income, and let's suppose you max out on your years of service multiplier.

So $40,000 x 0.6 x 0.75 = $18,000.

Even if my assumptions are way out of whack, I can't turn your "sow's ear" (actually a darn decent sum of money) into the silk purse you wish.

Sometimes arithmetic is no fun.

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