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Royalties &/or Residuals: Invest?

Posted: Tue Jun 20, 2017 8:19 pm
by DomDangelina
My father was a Hollywood music man. I recently learned that I'll be getting between $10,000 and $50,000 a year in royalties and/or residuals from his estate. I'm 45, single, no children, net worth of about $575,000. I've completely bailed out of the legal profession, have fled from California, and am now looking at real estate investment in my new land where the cost of living is 35% less than California.

What do you think I should do with this royalty and/or residual money? Invest it in my existing Vanguard index funds, set it aside for possible real estate investment, give it away, or a combination of all these? Thanks.

Re: Royalties &/or Residuals: Invest?

Posted: Tue Jun 20, 2017 10:58 pm
by PFInterest
sure.

Re: Royalties &/or Residuals: Invest?

Posted: Tue Jun 20, 2017 11:01 pm
by unclescrooge
Sex, drugs, and rock'n roll.

Re: Royalties &/or Residuals: Invest?

Posted: Tue Jun 20, 2017 11:11 pm
by SrGrumpy
Set up a scholarship/award in his name. People have such short memories these days, especially when it comes to pop culture. Was he big?

Re: Royalties &/or Residuals: Invest?

Posted: Wed Jun 21, 2017 1:58 am
by BanditKing
It's an income stream. Do with it what you would do with income normally.

I assume over time the royalties will shrink.

Personally, I'd consider it "found money" and use it to pay down any debt, makes sure my emergency fund was solid, and then send all of it to investments; pretend I'm not even getting it. Keeps me from getting any lifestyle creep.

Re: Royalties &/or Residuals: Invest?

Posted: Wed Jun 21, 2017 7:51 am
by aristotelian
Just add to your portfolio, according to your allocation. Make sure to set aside enough to pay taxes on the extra income.

You could look into starting a Donor Advised Fund but with $500K of net worth and a career change I would not give it all away.

I would prefer to work for a real estate investor rather than get involved in speculation with my own money.

Re: Royalties &/or Residuals: Invest?

Posted: Thu Jun 22, 2017 7:52 am
by Valuethinker
DomDangelina wrote:My father was a Hollywood music man. I recently learned that I'll be getting between $10,000 and $50,000 a year in royalties and/or residuals from his estate. I'm 45, single, no children, net worth of about $575,000. I've completely bailed out of the legal profession, have fled from California, and am now looking at real estate investment in my new land where the cost of living is 35% less than California.

What do you think I should do with this royalty and/or residual money? Invest it in my existing Vanguard index funds, set it aside for possible real estate investment, give it away, or a combination of all these? Thanks.
- we, here, can't tell you whether you should give it away

- doubtless it won't last forever? Things like Spotify pay far less royalties than previous formats like CDs, and streaming is the growing thing, pretty soon we are going to have a generation that has never paid for a music track in their lives

I would just invest it in my chosen retirement asset allocation. Another alternative would be to use it to repay existing debt faster eg if you buy a home on a mortgage.

Depressingly, $575k at 45 is not actually a huge sum of money *unless* you can find work which sustains your current expenses for the next 15-20 years. And if investment returns are as bad in the future as they might be (2 per cent on US govt bonds, 3-5% on equities) this is particularly important. Don't assume that past investment returns will be matched by future ones.

If you plan to invest in residential RE (that you don't live in) then having a lump sum of capital would be very important.

You might, sensibly, split it 3 ways say: charity, residential RE investment, current asset allocation.