How to use all this money.

Core

So my birthday was coming up and I get a card from my aunt in the mail. I open it figuring it's going to be some nice sum of money like maybe $100 bucks or something cause she is usually pretty generous with her gifts. Well turns out she gave me $10.000. So here I sit 23 with more money than I've ever had at one time. I'm still at my parent's house because they live 5 minutes from my school and you can't beat that convenience. I'm one semester from graduating and not long after that will probably be looking to move out.

Alright backstory finished. I've got this money what should I do with it? I was thinking starting to purchase things I'm probably going to want when I move out, like say a computer cause I don't really have one that is just mine. Or maybe a nice tv or something. Problem is I'm having a tough time justifying that stuff. I don't want to waste the money. I was thinking maybe of investing it or something, but I've really got no idea how to go about that. Who would I go talk to about where to put the money if I wanted to do that? Anyone got any good ideas?

naporeon

Buy something useful, like a computer, and put the rest in some sort of investment. Such as CDs, or something of that sort.

wunderbar

naporeon wrote: »

Buy something useful, like a computer, and put the rest in some sort of investment. Such as CDs, or something of that sort.

ya, as a rule, buy one nice thing for yourself. if you put it *all* away, You'll find that you want to use it more. spend like, $2000 on something for fun, then put the rest in a high interest savings account, or some kind of investment. Really, it's free money, and if you put it in a good investment, in 5 years, you could have double or more.

tony_important

buy me a wii.
Hahaha.

Seriously though, get yourself something nice and save the rest.

However, you should probably cash the cheque and sleep on the money for at least one night.

naporeon

If it were my money, and I didn't feel like a more hands-on investment, I would go to a SMALL BANK, and put as much as I could into as long and large a CD as I was comfortable with.

KalTorak

naporeon wrote: »

If it were my money, and I didn't feel like a more hands-on investment, I would go to a SMALL BANK, and put as much as I could into as long and large a CD as I was comfortable with.

Just curious, why a small bank? Does it make a difference?

Chesterton

Depends on your plan after college and your needs. You could use it to buy a car (if you need one), or you could buy a house and use it as a down payment. Otherwise, yeah, spend a little on yourself and save/invest the rest for when you DO need a car or a down payment.

Core

naporeon wrote: »

If it were my money, and I didn't feel like a more hands-on investment, I would go to a SMALL BANK, and put as much as I could into as long and large a CD as I was comfortable with.

Yeah this sounds like a good idea I bank at a Credit Union and they have some decent rates on CDs, maybe I should put some of it in there for like a 12 or 24 month CD.

naporeon

KalTorak wrote: »

naporeon wrote: »

If it were my money, and I didn't feel like a more hands-on investment, I would go to a SMALL BANK, and put as much as I could into as long and large a CD as I was comfortable with.

Just curious, why a small bank? Does it make a difference?

The smaller the bank, the higher the yield, generally speaking.

Kyougu

I would give some to your parents, or at least buy them something, just as a thanks for everything they done.

KalTorak

naporeon wrote: »

KalTorak wrote: »

naporeon wrote: »

If it were my money, and I didn't feel like a more hands-on investment, I would go to a SMALL BANK, and put as much as I could into as long and large a CD as I was comfortable with.

Just curious, why a small bank? Does it make a difference?

The smaller the bank, the higher the yield, generally speaking.

Yeah that makes sense, now that I think about it.

Fellhand

If you have glasses get LASIK. Think about how many years you'll be able to enjoy it. I'd look at a nice used car as well and possibly put the rest of the money away for days when you're broke or when money is tight. I know it's hard to do, but you'll be thankful when you have the money at those times and mentally pat yourself on the back.

naporeon

Another idea might be to bank just a little (like, say, $2000-$3000), and use the rest to move to Europe for a while.

I moved to Scotland when I was 19, on money that I'd saved while working at Safeway and living at my parents' house. I stayed there for two years, and it was the most incredible experience of my life.

It's also great personal experience when it comes to grad school/law school/etc. applications. They love that sort of thing.

naporeon

Fellhand wrote: »

If you have glasses get LASIK. Think about how many years you'll be able to enjoy it. I'd look at a nice used car as well and possibly put the rest of the money away for days when you're broke or when money is tight. I know it's hard to do, but you'll be thankful when you have the money at those times and mentally pat yourself on the back.

I think that they like to wait until age 25-26 to do that, since your eyes are kind of still developing until then.

Vrtra Theory

wunderbar wrote: »

naporeon wrote: »

Buy something useful, like a computer, and put the rest in some sort of investment. Such as CDs, or something of that sort.

ya, as a rule, buy one nice thing for yourself. if you put it *all* away, You'll find that you want to use it more. spend like, $2000 on something for fun, then put the rest in a high interest savings account, or some kind of investment. Really, it's free money, and if you put it in a good investment, in 5 years, you could have double or more.

To double your money you'd need to be making 15% for those five years. Of course that's possible, but I'd call that speculating, not investing. :P

t OP: I agree with others that finding a nice CD rate and dropping the majority of the money in there is a good bet. In fact, all of your "investing" should be in high-interest savings and CDs until you have a solid buffer of savings - most people don't recommend even looking at stocks and the like until you have six months of living expenses saved up as backup.

Looking at smaller banks and credit unions is a good idea, but while you're at it check out the rates at places like ING Direct as well. Their Orange savings accounts and CDs are usually pretty competitive.

Sonos

Nice aunt. I'd get a 100% loan on a mortgage, use the $10K for the closing costs and buy your first home. You will have a freaking house all of a sudden and your aunt will be all liek, "What the hell he bought a house. My nephew rocks!"

Thanatos

Take all of it, shop around for a good rate, and stick it in a 3-6 month CD.

Take that time, and think very hard about what you want to do with that money. At the end of the 3-6 months, you should probably have another $125-$250 or so, and you'll have a good idea of what you actually want to do with it. This will prevent you from making any impulse decisions. Should also impress your parents and your aunt, if you care. :P

I mean, really, I take a week or two to think before I spend $50 on something; I don't think 3-6 months for $10,000 is a bad idea.

Hlubocky

Whatever you do, don't put it in a crappy bank savings account until you 'figure out' what to do with it. If there is any doubt, open up an ING Orange savings account which gets you 4.5% APY (which is about as good as it gets without the commitment of a CD. It is free and you can transfer money over from any bank checking account with no fees.

LondonBridge

Use it pay off any bills you may have like your car or credit card if you have them. Saves a lot on the interest.

Thanatos

LondonBridge wrote: »

Use it pay off any bills you may have like your car or credit card if you have them. Saves a lot on the interest.

Yeah, actually, if you've got credit card debt, the first thing you should do is pay that off. Then put the rest into a CD.

SatanIsMyMotor

Invest all of it. Something with relatively low interest with no risk.
Seriously, take it from me, invest ALL OF IT.
I was in your exact same situation x2 when I was 18. I'm now 24 and I ended up pissing most of that money away and it is the biggest mistake I've made my entire life. I would be 50% more financially comfortable today if I had just had some discipline and been responsible with that money.

Ruckus

naporeon wrote: »

Fellhand wrote: »

If you have glasses get LASIK. Think about how many years you'll be able to enjoy it. I'd look at a nice used car as well and possibly put the rest of the money away for days when you're broke or when money is tight. I know it's hard to do, but you'll be thankful when you have the money at those times and mentally pat yourself on the back.

I think that they like to wait until age 25-26 to do that, since your eyes are kind of still developing until then.

Generally, yes, but really it's not so much an age thing as just making sure your eyesite has stabalized. For instance, I got glasses in grade 5, but from grade 11 until after college my prescription hadn't changed, so my optomatrist determined my eyes had stabalized and I got LASIK a couple weeks after my 21st birthday.

On topic, I'd recommend spending up to $2000 and dropping the rest into savings. Also, small bank or credit union. I've found the big banks (moreso in the US) will screw you out of money faster and harder than small banks, with Credit Unions being the best.

RocketSauce

Before you go spending it, are you sure your aunt intended to give you $10,000? It could be a typo on her part. Maybe she did mean to give you $100 but made a mistake.

If this is pretty unusual, I'd just call her up and make sure (unless you've already done that).

As for how to spend it, if you're planning on moving out, why not use it to help get you set up in your new place? Some new furniture, new TV, all the other essentials you'll need. Just save the rest, put it in a retirement account and let it work for you.

Horus

HSBC has specials sometimes where they give you 5.25%, I just opened a CD recently after getting $2k from taxes and I payed off my school loans in a year. So I did not know what to do with the money and I am making myself a strict budget because I want to get a new job but need some cushion.

Yeah invest the money, because you will spend the money on things temporarily you will need.

Also send a thank you card to your aunt and nice gift for all that money she gave you.

naporeon

Thanatos wrote: »

LondonBridge wrote: »

Use it pay off any bills you may have like your car or credit card if you have them. Saves a lot on the interest.

Yeah, actually, if you've got credit card debt, the first thing you should do is pay that off. Then put the rest into a CD.

I just assumed that he didn't have college loans or credit card debt, since he was living at home.

If he does, though, this is the best advice.

Jimmy King

Sonos wrote: »

Nice aunt. I'd get a 100% loan on a mortgage, use the $10K for the closing costs and buy your first home. You will have a freaking house all of a sudden and your aunt will be all liek, "What the hell he bought a house. My nephew rocks!"

Plus a mortgage that he probably can't afford (he's 23, in school and living with his parents which means he probably isn't working a high paying full time job) on a house he doesn't need yet.

I'm with the people saying to spend maybe $1000-$2000 at most on something fun and invest the rest until you actually need it. I wouldn't bother buying things that you'll need/want when you move out unless you intend to move out very soon. Pretty much anything you buy for that reason now will just sit around and be in the way and you can get a better one for the same or less money when the time comes that you really need it.

Thanatos

naporeon wrote: »

Thanatos wrote: »

LondonBridge wrote: »

Use it pay off any bills you may have like your car or credit card if you have them. Saves a lot on the interest.

Yeah, actually, if you've got credit card debt, the first thing you should do is pay that off. Then put the rest into a CD.

I just assumed that he didn't have college loans or credit card debt, since he was living at home.

If he does, though, this is the best advice.

College loans get a bit more complicated. You may not want to pay those down, because the interest rates are frequently lower than the interest you can get on a savings account, and the interest is tax-deductible, so what interest you are paying typically costs you about $0.80 per dollar.

Core

I'm pretty set as far as debt goes, I'm going to a tech school that charges per credit so I've just been paying as I took classes and I paid off my car in full a while ago. Also I never trusted myself with a credit card so no worries there. I'm thinking I'll go with what a lot of people are saying spend about $1000-2000 on probably a computer and desk and few other things then invest the rest in a CD or another form of investment. Thanks for all the help everyone, having this much money just dropped in my lap seemed overwhelming at first.

Gdiguy

Horus wrote: »

HSBC has specials sometimes where they give you 5.25%, I just opened a CD recently after getting $2k from taxes and I payed off my school loans in a year. So I did not know what to do with the money and I am making myself a strict budget because I want to get a new job but need some cushion.

Yeah invest the money, because you will spend the money on things temporarily you will need.

Also send a thank you card to your aunt and nice gift for all that money she gave you.

An HSBC online saving account gets like 5.05% interest, which personally is a lot better than locking your money into a 6 month CD for .2% more interest. If you're sure you don't need it at all in the next X months then sure, but if there's even the possibility that you'll want to get a computer/car/whatever, it's nice to have the flexibility.

Also, you might want to look into how much you're going to owe in taxes on that, because I vaguely recall 10k being over the limit for not being taxed

Thanatos

Gdiguy wrote: »

Horus wrote: »

HSBC has specials sometimes where they give you 5.25%, I just opened a CD recently after getting $2k from taxes and I payed off my school loans in a year. So I did not know what to do with the money and I am making myself a strict budget because I want to get a new job but need some cushion.

Yeah invest the money, because you will spend the money on things temporarily you will need.

Also send a thank you card to your aunt and nice gift for all that money she gave you.

An HSBC online saving account gets like 5.05% interest, which personally is a lot better than locking your money into a 6 month CD for .2% more interest. If you're sure you don't need it at all in the next X months then sure, but if there's even the possibility that you'll want to get a computer/car/whatever, it's nice to have the flexibility.

Also, you might want to look into how much you're going to owe in taxes on that, because I vaguely recall 10k being over the limit for not being taxed

$12k is the limit.

Newton

Are you in the US? If so, take $4000 and open a Roth IRA. Compound interest will do amazing things to your money. I'd probably take another $4000 and put that towards either paying off debt if you have any, or a CD like other people are saying. With the other $2000, you should take a trip somewhere.

padmeamanda

Did your aunt say what she wanted you to spend it on?

When I graduated from college my mom gave me $1,000 and my grandparents gave me $2,000 and they all insisted that I spend it on a new computer... so I splurged on a nice new computer, graphics card upgrade, two monitors and surround sound and still had money left over gaining interest in the bank. In any case, my mom and grandparents were happy that I got what they wanted me to get, and I was happy and still had some extra.

misbehavin

RocketSauce wrote: »

Before you go spending it, are you sure your aunt intended to give you $10,000? It could be a typo on her part. Maybe she did mean to give you $100 but made a mistake.

If this is pretty unusual, I'd just call her up and make sure.

Seriously... 10K is a HUGE FUCKING gift... Make sure she didn't fuck up before you cost a beloved aunt a bounced check over a misplaced period.

Caswynben

I find it strange that she mailed you $10,000. That kind of money usually gets transferred.

CyberJackal

Seems like a lot of good advice here, but I'll just add one thing. Sounds like you'll be moving out before too long, so you may want to consider putting off a computer or whatever purchase until then. That way you won't have to go to the trouble of moving it with you, and any electronics will only get better and cheaper with time.

DesertBox

First, pay off credit cards.

Then, dump the remainder in an account that gives about 5% APY but still gives you quick access to your money (CDs can be bad if you need the money sooner than their term is up. ) DO NOT TOUCH THE MONEY UNTIL YOU HAVE GRADUATED AND HAVE A SECURE JOB. At this point, it'll be much easier to figure out what you do and do not need. Then you can come back and ask how to spend the money.

Rhino

Thanatos wrote: »

Take all of it, shop around for a good rate, and stick it in a 3-6 month CD.

Take that time, and think very hard about what you want to do with that money. At the end of the 3-6 months, you should probably have another $125-$250 or so, and you'll have a good idea of what you actually want to do with it. This will prevent you from making any impulse decisions. Should also impress your parents and your aunt, if you care. :P

I mean, really, I take a week or two to think before I spend $50 on something; I don't think 3-6 months for $10,000 is a bad idea.

I was going to suggest the exact same thing.

ingdirect.com usually has good CDs.
There are a couple other good banks, but yea, ingdirect is my favorite.

like he said, take $50 or so (i would say about 100-200) and just go spend it on crap... video games, candy, girls, candy, comic books, DVDs. That way you felt like you did 'something' fun with it. Then tuck away the rest into CDs so that you can't touch it.

EDIT:

also during that time it won't hurt to check out:
http://www.investopedia.com/

Some nice mutual funs, indices, bonds or other investment instrument might be nice.... just make sure you take the time to learn about them and their risks, before you throw money into them. Savings accounts and CDs are safe, stick with them for a bit and read up on other stuff in the meantime.

TheGreat2nd

misbehavin wrote: »

RocketSauce wrote: »

Before you go spending it, are you sure your aunt intended to give you $10,000? It could be a typo on her part. Maybe she did mean to give you $100 but made a mistake.

If this is pretty unusual, I'd just call her up and make sure.

Seriously... 10K is a HUGE FUCKING gift... Make sure she didn't fuck up before you cost a beloved aunt a bounced check over a misplaced period.

I'm gonna third that thought.

But, if she really is uber generous, spend like 2k on a computer, pay off your bills, and save the rest, echoing the rest of the thread.

Core

TheGreat2nd wrote: »

misbehavin wrote: »

RocketSauce wrote: »

Before you go spending it, are you sure your aunt intended to give you $10,000? It could be a typo on her part. Maybe she did mean to give you $100 but made a mistake.

If this is pretty unusual, I'd just call her up and make sure.

Seriously... 10K is a HUGE FUCKING gift... Make sure she didn't fuck up before you cost a beloved aunt a bounced check over a misplaced period.

I'm gonna third that thought.

But, if she really is uber generous, spend like 2k on a computer, pay off your bills, and save the rest, echoing the rest of the thread.

Yeah I'm 100% sure she meant to give me this much, they have a lot of money to use and are always extremely generous.

drinkinstout

to those talking about it being a wrong amount, you do know that when writing checks, you write out the amount in words on the line in addition to the dollar amount.... right?

so "ten thousand and 00/100

---

$10,000.00"
can't really be messed up on accident

If I were given that amount, and in your situation, I too would go down the "spend some on yourself and invest the rest" route. I'd definitly go with opening a roth IRA and maxing out this year's contributions, then put the rest in short(er) term savings for when you do move out of your parents place. If you spend smartly, that money can go a looong way but if you don't, it can be gone before you know it.

Rhino

also if your are going to buy a computer then PLEASE wait a month or two. It's rumored that intel is going to do a massive drop on Quad cores and even if you don't need 4 cores, it'll probably drop the prices out of a lot of other CPUs too (so they can stay competitive, "why buy dual core when you can get quad core for same price"?).

And for the love of god, don't buy something overly stupid like some $6K Dual SLI watercooled setup. Get something that'll last you 4 or 5 years.