Where to start?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Topic Author
WhatNow1214
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Where to start?

Post by WhatNow1214 » Mon Jan 13, 2020 11:42 am

My husband committed suicide leaving me and our underage children with a very large insurance policy payout. He made all financial decisions for our family, and I am embarrassed I have no idea what to do or who to consult. We didn't own a home, and I didn't work because I am in university finishing up my undergraduate degree. Any suggestions where I should start? The loss is still very new, but I'm going to need to be prepared once the policy pays out. I want to have some sort of game plan instead of being emotional about decisions for my family's future.
Last edited by WhatNow1214 on Mon Jan 13, 2020 2:32 pm, edited 1 time in total.

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goodenyou
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Re: Where to start?

Post by goodenyou » Mon Jan 13, 2020 12:07 pm

So sorry for your loss and circumstances. The most important thing is not to do anything major with your proceeds until you are in the right frame of mind. Leaving the settlement in a FDIC bank account(s) to meet your immediate needs is prudent. I would seek the advice of Vanguard or Fidelity for a long term strategy to meet your long term needs. Don’t fall prey to people that may take advantage of you when you are not mentally prepared. Your financial opportunity loss will pale in comparison to your potential loss from poor decisions at this time.
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livesoft
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Re: Where to start?

Post by livesoft » Mon Jan 13, 2020 12:13 pm

I am truly sorry for your loss. It is going to be tough despite perhaps having enough money to get you by for the next few years.

I have helped a widow after her husband passed away unexpectedly. I learned quite a bit from her struggles which were mostly emotional. She leaned on family, friends, people at church, in the neighborhood, physicians, colleagues at work, people at the bank, and so on. Unfortunately, while everybody was well-meaning they all had their own perspective on things. Notably, the bank and insurance people were rather biased. But so were friends and family who all gave conflicting and sometimes self-serving advice.

I will say this: Don't invest anything for awhile and put any money in a high-yield savings account at Ally or in a money market fund at Vanguard while you sort things out which could take months. Don't commit money to anything that has an early withdrawal penalty such as an annuity or that has a front-end load or an expense ratio larger than 0.30% (that's an arbitrary cutoff). If you don't know what that means, then please ask.

Good luck!

You may wish to start here:
https://www.bogleheads.org/wiki/Managing_a_windfall
and here:
https://www.bogleheads.org/wiki/Getting_started
Last edited by livesoft on Mon Jan 13, 2020 12:16 pm, edited 1 time in total.
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BV3273
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Re: Where to start?

Post by BV3273 » Mon Jan 13, 2020 12:15 pm

WhatNow1214 wrote:
Mon Jan 13, 2020 11:42 am
My husband committed suicide leaving me and our underage children with a very large insurance policy payout. He made all financial decisions for our family, and I am embarrassed I have no idea what to do or who to consult. We didn't own a home, and I didn't work because I was in university finishing up my undergraduate degree. Any suggestions where I should start? The loss is still very new, but I'm going to need to be prepared once the policy pays out. I want to have some sort of game plan instead of being emotional about decisions for my family's future.
Sorry for your loss.

As already mentioned depending on how large it is deposit it in an FDIC insured account(s) and wait until everything quiets down.

You’re going through a lot right now and to be honest you don’t need any more on your plate. Just put it some place safe and liquid and when the time comes you can revisit.

The folks on this board will help you, but take care of your family and yourself first.

livesoft
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Re: Where to start?

Post by livesoft » Mon Jan 13, 2020 12:18 pm

BV3273 wrote:
Mon Jan 13, 2020 12:15 pm
As already mentioned depending on how large it is deposit it in an FDIC insured account(s) and wait until everything quiets down.
I do not believe that an FDIC-insured account is actually necessary. For instance, a Vanguard Money Market fund is not FDIC-insured and would be a very fine place to park money.
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Topic Author
WhatNow1214
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Re: Where to start?

Post by WhatNow1214 » Mon Jan 13, 2020 12:18 pm

Thank you for your honesty and response. I have been doing some reading on my own. The more I read the more I realize I know so little. Do Vanguard or Fidelity present only their products for commission or is that why I should consult with them to avoid a salesperson who might present products based on what best suits them? Another question if I may, how would I go about contacting a Vanguard or Fidelity agent or do they have independent agents that represent their products?

Thanks again.

chevca
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Re: Where to start?

Post by chevca » Mon Jan 13, 2020 12:20 pm

Sorry to hear about that!

The plan for now is take care of the kids and yourself. The plan for the money.... do nothing with it for now. Let it sit somewhere safe while you figure out where life takes you from here. Figure out the finances and how to run those on your own. Figure out where you and the kids want to live. Get through all the processes of the loss. Pay off debts? Then start on an investing plan.

livesoft
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Re: Where to start?

Post by livesoft » Mon Jan 13, 2020 12:20 pm

Vanguard is no commission. Fidelity has products that have commission and also products that have no commission. If you talk to Vanguard over the phone, then I think you are assured that there will be no commissions and no front-end loads for anything they suggest. However, if you talk to Fideilty or walk into their office, it will be up to you to avoid the commissions, front-end loads, and investment management fees if that is what you want to avoid.

You can peruse Vanguard.com and Fidelity.com on your own without talking a real live human being. Otherwise, you can phone them, but it could be overwhelming unless you already know what you would like to do.
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Katietsu
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Re: Where to start?

Post by Katietsu » Mon Jan 13, 2020 12:28 pm

The difficulty is that when you most need a financial advisor, you are also most vulnerable to getting bad advice or paying high fees. It is good that you found this forum. Before you move forward, I would suggest coming back here to get an opinion on the proposed plan. Please reread the first post by livesoft. He has given you good advice.
Last edited by Katietsu on Mon Jan 13, 2020 12:32 pm, edited 1 time in total.

livesoft
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Re: Where to start?

Post by livesoft » Mon Jan 13, 2020 12:31 pm

You and your husband may have accounts at various financial institutions already. While you do not have to tell us about them, if you do, then we can comment on their benefit to you as well as the integrity and helpfulness that our own experiences with those firms have been.
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Grt2bOutdoors
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Re: Where to start?

Post by Grt2bOutdoors » Mon Jan 13, 2020 12:34 pm

I'm so sorry for your loss.

If you do place the monies in an FDIC insured account, you may want to title each account differently to ensure you will receive full insurance coverage. FDIC insurance coverage is currently $250,000 per account title. Here is a summary of how accounts can be titled and there is a link on that page to Electronic Deposit Insurance Estimator (EDIE) to assess your current situation. https://www.fdic.gov/deposit/covered/categories.html

For the first year, do nothing with the monies. Put it in the FDIC insured accounts, give yourself and family time, time to learn and go slow.
Was your husband working or had worked in the U.S. for any period of time? You and children could be eligible for Social Security benefits. Visit www.ssa.gov
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Topic Author
WhatNow1214
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Re: Where to start?

Post by WhatNow1214 » Mon Jan 13, 2020 12:37 pm

So I believe MetLife will open an account an fund it. I'm assuming that's not the same as what Vanguard will do? And I agree: I've turned here because everyone, especially family members have advice - including home repairs they need - and I'm starting to panic. The only thing I want to do is buy a home away from the most vocal family members and set up college funds for the kids. I also want to spend a year with the kids in therapy and maybe work part-time and that will require money. At the risk of sounding needy, do I hire an accountant in addition to our attorney or is this premature? Should I just rent until my head's in the right place? I know the board isn't meant for therapy, but the amount of money is a lot for us and is bringing its own set of issues where all I have the energy for is to still grieve the loss of my husband.

Thanks for your patience.

chevca
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Re: Where to start?

Post by chevca » Mon Jan 13, 2020 12:44 pm

I would rent for now, if I were you. If you wanted to move somewhere due to reminders or such, that's understandable. But, keep renting until things are more settled and you can get better/clearer look at what you want.

I assume it's his side for the family members that think some of this should go to them? Unfortunate, but that's the way it tends to go. Simplest way to handle it.... tell 'em to buzz off. Easier way to handle it... tell them you're not doing anything with the money for a year and will decide then.... then tell 'em to buzz off in a year. :happy

Katietsu
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Re: Where to start?

Post by Katietsu » Mon Jan 13, 2020 12:46 pm

I am not familiar with the options offered by MetLife. But my husband did receive a life insurance payout from John Hancock. We agreed to open what was basically a bank money market account with John Hancock for the proceeds. The interest rate was competitive and it was a good place to let it sit for a bit. If MetLife gives you this option, that would be an acceptable place to start.The concern is that you do not want a Met Life representative put you into a high cost investment or one with surrender fees.

I think renting sounds like a good idea. Give yourself time to know which direction you want to go. You need to take care of the immediate needs for you and your family. I would not even put aside money for college funding yet.

On a related topic, do you need to make plans for health insurance for your family? If your insurance was through your husband, you may be eligible for COBRA. If you are or will need to use an ACA policy, this might affect some of your other decisions.
Last edited by Katietsu on Mon Jan 13, 2020 12:58 pm, edited 1 time in total.

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WhatNow1214
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Re: Where to start?

Post by WhatNow1214 » Mon Jan 13, 2020 12:51 pm

Because of the circumstances, my husband has a 401k with Barclays, with an amount I still don't know. He also had an account with Vanguard from a previous employer, which I believe was converted into a simple IRA, but I need it. Under the circumstances, my parents are helping support us but they can only afford to do so another month or so, and nothing pays out unless there is a cause of death on the death certificate. Still waiting for it and where we live, it can take up to 16 weeks. My plan was to move and purchase a house with cash and get out of debt, but I'm reading that might not be the best thing to do either. I do have an appointment with Social Security for benefits for the children and for myself as their caretaker. Livesoft, thank you - I will look at Vanguard's website and make it my job to learn about my family's finances now. I hope my questions don't become bothersome.

The one person I would have asked all these questions of, I can't. He would have known exactly what to do.

Thanks again for your patience.

Admiral
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Re: Where to start?

Post by Admiral » Mon Jan 13, 2020 12:53 pm

Sorry for your loss, that is terrible.

W/o offering too much in the way of specifics (unless you care to):

What is the ratio of the life insurance policy payout to your ongoing yearly expenses and your projected expenses in the not too distant future?

This is highly relevant because A) you were not working; B) you talk about buying a home; C) you have kids, so college will come into the picture.

For example, if your annual expenses were $75k, there's a big difference--and a much different type of planning that needs to be done--if the policy is $1m versus, say, $5m or $10m.

A $1m policy means you likely need to find a full time job soon (esp if you plan to buy a house) while $10m may not.

Topic Author
WhatNow1214
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Re: Where to start?

Post by WhatNow1214 » Mon Jan 13, 2020 12:57 pm

Katietsu wrote:
Mon Jan 13, 2020 12:46 pm
I am not familiar with the options offered by MetLife. But my husband did receive a life insurance payout from John Hancock. We agreed to open what was basically a bank money market account with John Hancock for the proceeds. The interest rate was competitive and it was a good place to let it sit for a bit. If MetLife gives you this option, that would be an acceptable place to start. The concern is that you do not want a Met Life representative put you into a high cost investment or one with surrender fees.
Are they allowed to do this? I signed something, which I'll have to look at when I get home (currently with mom and dad to get away from everyone). Can I rescind this before they policy? This is probably a question for them to answer - yipes! I hadn't considered this might even be possible!

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Taylor Larimore
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Re: Where to start?

Post by Taylor Larimore » Mon Jan 13, 2020 12:58 pm

WhatNow1214 wrote:
Mon Jan 13, 2020 11:42 am
My husband committed suicide leaving me and our underage children with a very large insurance policy payout. He made all financial decisions for our family, and I am embarrassed I have no idea what to do or who to consult. We didn't own a home, and I didn't work because I was in university finishing up my undergraduate degree. Any suggestions where I should start? The loss is still very new, but I'm going to need to be prepared once the policy pays out. I want to have some sort of game plan instead of being emotional about decisions for my family's future.
WhatNow1214:

Please accept my sincerest sympathy for the loss of your husband. I lost my wife of 62 years in 2013 so I share your feelings.

You have received good advice, above. You may be the target of persons who are inexperienced or more interested in enriching themselves than helping you. Remember this important advice from the highly respected author and advisor, Bill Bernstein:
"Act as if every broker, insurance salesman, mutual fund salesperson, and financial advisor is a hardened criminal, and stick to low-cost index funds, and you'll do just fine."
If you send me your name and address by private message (in the right margin) I would be pleased to send you my latest book, The Bogleheads' Guide to The Three-Fund Portfolio.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "The best time to sell a new fund to investors--when it's hot--is often the worst time to buy it."
"Simplicity is the master key to financial success." -- Jack Bogle

livesoft
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Re: Where to start?

Post by livesoft » Mon Jan 13, 2020 1:00 pm

Admiral wrote:
Mon Jan 13, 2020 12:53 pm
A $1m policy means you likely need to find a full time job soon (esp if you plan to buy a house) while $10m may not.
If "soon" means within 5 years, then the above statement is simply not true. A $1,000,000 payout can last most renters quite a number of years. Sure, one will not be able to live forever off the investment return of the money, but I don't think that is the issue here.

As for the MetLife account that will likely hold the life insurance proceeds, I think you can rest easy about that. Check it out, but I think they pay a decent rate and the money is totally accessible and withdrawable, so not a problem.
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Admiral
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Re: Where to start?

Post by Admiral » Mon Jan 13, 2020 1:06 pm

livesoft wrote:
Mon Jan 13, 2020 1:00 pm
Admiral wrote:
Mon Jan 13, 2020 12:53 pm
A $1m policy means you likely need to find a full time job soon (esp if you plan to buy a house) while $10m may not.
If "soon" means within 5 years, then the above statement is simply not true. A $1,000,000 payout can last most renters quite a number of years. Sure, one will not be able to live forever off the investment return of the money, but I don't think that is the issue here.

As for the MetLife account that will likely hold the life insurance proceeds, I think you can rest easy about that. Check it out, but I think they pay a decent rate and the money is totally accessible and withdrawable, so not a problem.
Sorry but I disagree. Conservatively, you're talking a hundred to hundreds of thousands of dollars for college and for a house (as noted in the OP). That should be reserved from the insurance policy, in my view. Sure, the OP doesn't need to hit the classifieds tomorrow. But I would say w/i a year or two, as emotions dictate.

EDIT TO Add: we don't know what "very large" is to the OP. My point was that the decisions and the timing of them is depended on the amount as a ratio to what the OP needs to live, and needs to reserve/invest for the future.
Last edited by Admiral on Mon Jan 13, 2020 1:09 pm, edited 1 time in total.

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WhatNow1214
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Re: Where to start?

Post by WhatNow1214 » Mon Jan 13, 2020 1:08 pm

Admiral wrote:
Mon Jan 13, 2020 12:53 pm
Sorry for your loss, that is terrible.

W/o offering too much in the way of specifics (unless you care to):

What is the ratio of the life insurance policy payout to your ongoing yearly expenses and your projected expenses in the not too distant future?

This is highly relevant because A) you were not working; B) you talk about buying a home; C) you have kids, so college will come into the picture.

For example, if your annual expenses were $75k, there's a big difference--and a much different type of planning that needs to be done--if the policy is $1m versus, say, $5m or $10m.

A $1m policy means you likely need to find a full time job soon (esp if you plan to buy a house) while $10m may not.

I estimate our yearly expense last year was about 100K; however, my husband had adult children he supported through college and child support. We have two young children who will be in college in 8 and 9 years. The policy payout is $1.5m. I can rent, which is starting to make sense to me now that I've mentioned it to the board. We lived modestly because the greatest expense was the support and college loans for his children.

Katietsu
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Re: Where to start?

Post by Katietsu » Mon Jan 13, 2020 1:08 pm

WhatNow1214 wrote:
Mon Jan 13, 2020 12:57 pm
Katietsu wrote:
Mon Jan 13, 2020 12:46 pm
I am not familiar with the options offered by MetLife. But my husband did receive a life insurance payout from John Hancock. We agreed to open what was basically a bank money market account with John Hancock for the proceeds. The interest rate was competitive and it was a good place to let it sit for a bit. If MetLife gives you this option, that would be an acceptable place to start. The concern is that you do not want a Met Life representative put you into a high cost investment or one with surrender fees.
Are they allowed to do this? I signed something, which I'll have to look at when I get home (currently with mom and dad to get away from everyone). Can I rescind this before they policy? This is probably a question for them to answer - yipes! I hadn't considered this might even be possible!
I did not mean to unduly worry you. It is OK to have MetLife set up a bank account to deposit the funds. But they may call you later and offer you products that are not in your best interest. On one occasion I was given the opportunity to put life insurance proceeds into an annuity. But it was obvious that that option was not just a bank account.

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gmaynardkrebs
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Re: Where to start?

Post by gmaynardkrebs » Mon Jan 13, 2020 1:08 pm

Metlife has commission sales people who will try to sell you all sorts of products with high commissions. Keeping your money with them is like hanging red meat before a pack of wolves. Move it to an FDIC bank or to a Vanguard MM fund.

I agree, don't make any major investments for a while.

22twain
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Re: Where to start?

Post by 22twain » Mon Jan 13, 2020 1:12 pm

(I see now that several posts came in while I writing this, so keep that in mind when evaluating my comments.)
WhatNow1214 wrote:
Mon Jan 13, 2020 12:37 pm
So I believe MetLife will open an account an fund it.
Is MetLife the company that the insurance policy was with? A Google search for "metlife bank" reveals that MetLife used to own a regular bank (with FDIC insurance, I assume), but sold it to GE Capital in 2013.

Do you have a more specific description of what kind of account MetLife proposes to put your money in?

I think most people here would say to get the money away from any insurance company as soon as possible. They're generally bad places to invest because they'll try to sell you high-fee whole-life insurance policies and/or annuities.

Do you already have a bank account of some kind, probably at some local bank? If so, I would simply put the money there for now. If you have only a checking account, set up a savings account at the same institution. As others have noted already, if it's more than $250,000 you should get it into separate accounts (either differently-titled accounts at the same bank, or at different banks) to keep it all under FDIC insurance.

Don't worry about maximizing interest for now, just keep the money safe. Take a few months to take care of other business, find a job if necessary, learn more about basic investing, etc. This forum has a lot of resources and knowledgeable members who can point you to them and answer questions.
My investing princiPLEs do not include absolutely preserving princiPAL.

Topic Author
WhatNow1214
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Re: Where to start?

Post by WhatNow1214 » Mon Jan 13, 2020 1:19 pm

chevca wrote:
Mon Jan 13, 2020 12:44 pm
I would rent for now, if I were you. If you wanted to move somewhere due to reminders or such, that's understandable. But, keep renting until things are more settled and you can get better/clearer look at what you want.

I assume it's his side for the family members that think some of this should go to them? Unfortunate, but that's the way it tends to go. Simplest way to handle it.... tell 'em to buzz off. Easier way to handle it... tell them you're not doing anything with the money for a year and will decide then.... then tell 'em to buzz off in a year. :happy
Unfortunately, yes, it is.
Last edited by WhatNow1214 on Tue Jan 14, 2020 10:18 am, edited 1 time in total.

chevca
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Re: Where to start?

Post by chevca » Mon Jan 13, 2020 1:23 pm

WhatNow1214 wrote:
Mon Jan 13, 2020 1:08 pm
Admiral wrote:
Mon Jan 13, 2020 12:53 pm
Sorry for your loss, that is terrible.

W/o offering too much in the way of specifics (unless you care to):

What is the ratio of the life insurance policy payout to your ongoing yearly expenses and your projected expenses in the not too distant future?

This is highly relevant because A) you were not working; B) you talk about buying a home; C) you have kids, so college will come into the picture.

For example, if your annual expenses were $75k, there's a big difference--and a much different type of planning that needs to be done--if the policy is $1m versus, say, $5m or $10m.

A $1m policy means you likely need to find a full time job soon (esp if you plan to buy a house) while $10m may not.

I estimate our yearly expense last year was about 100K; however, my husband had adult children he supported through college and child support. We have two young children who will be in college in 8 and 9 years. The policy payout is $1.5m. I can rent, which is starting to make sense to me now that I've mentioned it to the board. We lived modestly because the greatest expense was the support and college loans for his children.
Oh, that does complicate things. They're his children. Of course they're going to want something.

I assume you are the primary beneficiary on the life insurance and other accounts... everything goes to you? They are likely to feel left out and hurt not getting anything. Is what it is though.

Was there a will saying who gets what?
Last edited by chevca on Mon Jan 13, 2020 1:24 pm, edited 1 time in total.

livesoft
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Re: Where to start?

Post by livesoft » Mon Jan 13, 2020 1:24 pm

It is also possible that the deceased husband had more than one life insurance policy and that the beneficiaries were other family members. They would not have to tell the surviving spouse about those at all.
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rich126
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Re: Where to start?

Post by rich126 » Mon Jan 13, 2020 1:46 pm

This is obviously a nightmare. I've never been married or had any children so no one is depending on me for income. I do think what a mess it would be for someone to track down all my assets. Some are obvious (you get a physical piece of mail for an account so at least someone knows you have an account there), others are either electronic (if you don't have access to their email address you may never know an account exists), and others you have to pull information from (my company provides a life insurance policy on me which may not be obvious to people).

Couple this confusion with the stress of getting your life together and with people trying to take advantage of you and it is rough.

Like others said, don't rush into anything. If anyone says you have to do this immediately, that should raise a red flag. Consult an attorney and maybe find some kind of person/office that helps people in these situations.

I'm sure there is some kind of checklist you can find online and go through it trying to find all your accounts, how much is in each one, etc. Just do a quick google search (I found several).

And a sum of money may seem large but when you realize it may have to last for decades maybe it isn't so large. While there are a lot of helpful people out there, there are a few that are only looking to make a quick buck so be careful.

3504PIR
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Re: Where to start?

Post by 3504PIR » Mon Jan 13, 2020 2:00 pm

WhatNow1214 wrote:
Mon Jan 13, 2020 12:37 pm
So I believe MetLife will open an account an fund it. I'm assuming that's not the same as what Vanguard will do? And I agree: I've turned here because everyone, especially family members have advice - including home repairs they need - and I'm starting to panic. The only thing I want to do is buy a home away from the most vocal family members and set up college funds for the kids. I also want to spend a year with the kids in therapy and maybe work part-time and that will require money. At the risk of sounding needy, do I hire an accountant in addition to our attorney or is this premature? Should I just rent until my head's in the right place? I know the board isn't meant for therapy, but the amount of money is a lot for us and is bringing its own set of issues where all I have the energy for is to still grieve the loss of my husband.

Thanks for your patience.
This is why you have received recommendations to “park” the funds in a safe haven, such as a savings account while the emotions and the mourning process play out. While you would do fine putting the money into a money market account at vanguard or fidelity at this point, doing so may add pressure to your decision making process. Simply go to your bank and place the funds into a simple savings account and turn your attention to your immediate family. As time goes buy, take the time you need to begin to learn about basic finances and how to better manage these funds.

Keep it simple for now. In a few months start educating yourself and take your time doing so. You will note that you are already jumping around in your head a little which is perfectly understandable, but it is also perfect evidence that for now, you should just put the funds into a savings account and forget about it for a good six months other than to draw on the funds you need to live during that time. Keep it simple, you have time to get your life in order.

I am sorry for your loss and the loss of the children.

Topic Author
WhatNow1214
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Re: Where to start?

Post by WhatNow1214 » Mon Jan 13, 2020 2:02 pm

chevca wrote:
Mon Jan 13, 2020 1:23 pm
WhatNow1214 wrote:
Mon Jan 13, 2020 1:08 pm
Admiral wrote:
Mon Jan 13, 2020 12:53 pm
Sorry for your loss, that is terrible.

W/o offering too much in the way of specifics (unless you care to):

What is the ratio of the life insurance policy payout to your ongoing yearly expenses and your projected expenses in the not too distant future?

This is highly relevant because A) you were not working; B) you talk about buying a home; C) you have kids, so college will come into the picture.

For example, if your annual expenses were $75k, there's a big difference--and a much different type of planning that needs to be done--if the policy is $1m versus, say, $5m or $10m.

A $1m policy means you likely need to find a full time job soon (esp if you plan to buy a house) while $10m may not.

I estimate our yearly expense last year was about 100K; however, my husband had adult children he supported through college and child support. We have two young children who will be in college in 8 and 9 years. The policy payout is $1.5m. I can rent, which is starting to make sense to me now that I've mentioned it to the board. We lived modestly because the greatest expense was the support and college loans for his children.
Oh, that does complicate things. They're his children. Of course they're going to want something.

I assume you are the primary beneficiary on the life insurance and other accounts... everything goes to you? They are likely to feel left out and hurt not getting anything. Is what it is though.

Was there a will saying who gets what?
There was no will, but there were policies for the adult children. He did provide for them.
Last edited by WhatNow1214 on Tue Jan 14, 2020 10:21 am, edited 2 times in total.

chevca
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Re: Where to start?

Post by chevca » Mon Jan 13, 2020 2:05 pm

WhatNow1214 wrote:
Mon Jan 13, 2020 2:02 pm
chevca wrote:
Mon Jan 13, 2020 1:23 pm
WhatNow1214 wrote:
Mon Jan 13, 2020 1:08 pm
Admiral wrote:
Mon Jan 13, 2020 12:53 pm
Sorry for your loss, that is terrible.

W/o offering too much in the way of specifics (unless you care to):

What is the ratio of the life insurance policy payout to your ongoing yearly expenses and your projected expenses in the not too distant future?

This is highly relevant because A) you were not working; B) you talk about buying a home; C) you have kids, so college will come into the picture.

For example, if your annual expenses were $75k, there's a big difference--and a much different type of planning that needs to be done--if the policy is $1m versus, say, $5m or $10m.

A $1m policy means you likely need to find a full time job soon (esp if you plan to buy a house) while $10m may not.

I estimate our yearly expense last year was about 100K; however, my husband had adult children he supported through college and child support. We have two young children who will be in college in 8 and 9 years. The policy payout is $1.5m. I can rent, which is starting to make sense to me now that I've mentioned it to the board. We lived modestly because the greatest expense was the support and college loans for his children.
Oh, that does complicate things. They're his children. Of course they're going to want something.

I assume you are the primary beneficiary on the life insurance and other accounts... everything goes to you? They are likely to feel left out and hurt not getting anything. Is what it is though.

Was there a will saying who gets what?
There was no will, but there were policies for the adult children. He did provide for them.
That's simplified then. :happy

Admiral
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Re: Where to start?

Post by Admiral » Mon Jan 13, 2020 2:12 pm

WhatNow1214 wrote:
Mon Jan 13, 2020 2:02 pm
chevca wrote:
Mon Jan 13, 2020 1:23 pm
WhatNow1214 wrote:
Mon Jan 13, 2020 1:08 pm
Admiral wrote:
Mon Jan 13, 2020 12:53 pm
Sorry for your loss, that is terrible.

W/o offering too much in the way of specifics (unless you care to):

What is the ratio of the life insurance policy payout to your ongoing yearly expenses and your projected expenses in the not too distant future?

This is highly relevant because A) you were not working; B) you talk about buying a home; C) you have kids, so college will come into the picture.

For example, if your annual expenses were $75k, there's a big difference--and a much different type of planning that needs to be done--if the policy is $1m versus, say, $5m or $10m.

A $1m policy means you likely need to find a full time job soon (esp if you plan to buy a house) while $10m may not.

I estimate our yearly expense last year was about 100K; however, my husband had adult children he supported through college and child support. We have two young children who will be in college in 8 and 9 years. The policy payout is $1.5m. I can rent, which is starting to make sense to me now that I've mentioned it to the board. We lived modestly because the greatest expense was the support and college loans for his children.
Oh, that does complicate things. They're his children. Of course they're going to want something.

I assume you are the primary beneficiary on the life insurance and other accounts... everything goes to you? They are likely to feel left out and hurt not getting anything. Is what it is though.

Was there a will saying who gets what?
There was no will, but there were policies for the adult children. He did provide for them.
Your first or among the first orders of biz is to make sure YOU have a will and trust for your own kids. Hire an estate atty.

Based on the added info on the policy and your expenses:

If it were me I would earmark $1m or more for the future. That is, do not plan to touch it. Plan on investing it (the “how” will come when you are ready to make those decisions.)

The rest, say $500k should in my view be earmarked for living expenses over the next few years. So, continue to rent and eventually you will find a job to your liking. The $ will help smooth out the rough patches, pay for childcare if need be and so on. Based on your children’s ages they are likely in school.

So, you will either need to pay for partial after school care or find a part time job or one with flexible hours. The $500k should help there. Plus, once you have a sense of husband’s portfolio you will know how much you may need for the more distant future.

Again: not saying to do ANYTHING with the funds for now. But this would be my general game plan. I would not worry about the adult kids from a previous marriage, esp if he left them funds. You’ve got plenty on your plate.

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goodenyou
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Re: Where to start?

Post by goodenyou » Mon Jan 13, 2020 2:13 pm

You are going to receive a lot of advice. You already are in this forum. The single best thing you can do is slow down. Don't try to solve all your perceived future problems all at once. Big decisions (house, college, long term investments) should wait. Since you landed on this site, you appear to have an interest in personal wealth management. This may be a good distraction for you and help you take control of your life. You should ease into it and educate yourself slowly. In the mean time, you could utilize the assistance of personal advisory services until you feel comfortable as a DIY investor. My mother went through this when my father died suddenly at age 35 and she had 2 kids under 12 years of age. She was a SAHM and had to figure all of it out herself. Stay strong!
"Ignorance more frequently begets confidence than does knowledge" | Do you know how to make a rain dance work? Dance until it rains.

livesoft
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Re: Where to start?

Post by livesoft » Mon Jan 13, 2020 2:22 pm

3504PIR wrote:
Mon Jan 13, 2020 2:00 pm
.... Simply go to your bank and place the funds into a simple savings account...
Such advice turned out to be some of the worst possible advice for my widowed friend. It opened her up to a sales pitch by the in-house salesreps within the bank every time she went in there. The savings account was an atrociously low rate at well. Just saying' ...

Vanguard and Ally through their online web sites allow one to be much more incognito and unbothered. Furthermore, if one has never done online banking nor online investing, they get a babystep out of the way in terms of registering online, opening an account online, and transferring money online.
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Topic Author
WhatNow1214
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Re: Where to start?

Post by WhatNow1214 » Mon Jan 13, 2020 2:29 pm

livesoft wrote:
Mon Jan 13, 2020 2:22 pm
3504PIR wrote:
Mon Jan 13, 2020 2:00 pm
.... Simply go to your bank and place the funds into a simple savings account...
Such advice turned out to be some of the worst possible advice for my widowed friend. It opened her up to a sales pitch by the in-house salesreps within the bank every time she went in there. The savings account was an atrociously low rate at well. Just saying' ...

Vanguard and Ally through their online web sites allow one to be much more incognito and unbothered. Furthermore, if one has never done online banking nor online investing, they get a babystep out of the way in terms of registering online, opening an account online, and transferring money online.
When I went to close out our joint account, the branch manager immediately suggested I speak to the wealth management team. I got scared since we had so little in the bank at the time, but I now assume she was thinking about the future of what our family might be coming into. Thanks for the reminder.

livesoft
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Re: Where to start?

Post by livesoft » Mon Jan 13, 2020 2:39 pm

However, I think you would want a checking account that had no monthly fees, so be sure to get something like that. Often, a no-fee account depends on a minimum balance or at least one direct-deposit (say from a paycheck) each month. Be sure that you did not open a new account that has a monthly fee or at least you know how to avoid the monthly fee.

It has been decades since many of us have paid any bank fees, so it might not be obvious to someone relatively new to some of this to know that bank fees are unnecessary and easily avoided.
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Wiggums
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Re: Where to start?

Post by Wiggums » Mon Jan 13, 2020 2:43 pm

OP

Very sorry for your lost and the circumstances you are now facing.
I can tell that you are overwhelmed and stressed. You are smart and you can do this.

1. Slow down and take a deep breath.

2. Don’t make big purchases or decisions right now.

3. Renting makes a lot of sense if you feel that you must move.

4. Take Taylor Larimore up on his generous offer to send you his book. It is absolutely one of the best books on investing, written in plain English.

5. Ask you questions on this forum. We are here to help people. We have nothing to sell and you can see that we often give you a perspective that you have not considered.

6. It will take time for you and your family to find your new normal. I think counseling can help you and your family.

7. Don’t feel like you have to invest the money as soon as you get it. I think it’s better if you keep it in high yield accounts that earn interest. That will give you the most flexibility while you understand your expenses, go to family counseling, get use to managing the finances, etc.

As many people stated, you don’t want yo make big financial decisions in a hurry. Some financial advisors would be happy to charge you big annuals fees, put you into 20-30 expensive funds, and churn the funds to generate more commissions for themself. Being a taxable account, it will be hard for you to unwind that mess once you find out how much the high fees are costing you.

Take care of yourself and your family needs. The money can sit in a high yield account for a long time. That is the best strategy for now.

Prayers for you and your family.

Good luck to you...

stuper1
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Re: Where to start?

Post by stuper1 » Mon Jan 13, 2020 2:48 pm

Very, very sorry for your loss and difficult relatives.

I am going to give you some very specific advice, because if you were my wife, that's what I would want. You can take this advice now, and then start researching as long as you want, and make any changes you feel necessary in the future.

Find out what Social Security benefits you qualify for with minor children.

Open a brokerage account at fidelity.com within the next 90 days. Put all of your life insurance money in the Fidelity Freedom Index 2015 fund (symbol FLIFX). There is a similar fund that you want to avoid called Fidelity Freedom 2015 fund (avoid this one because it is not an index fund; you will learn later what this means if you don't know now). The FLIFX fund holds about 40% index stocks and 60% index bonds, which is fairly conservative (this ratio of stocks to bonds may be too conservative or too risky for you in the long term, but for the short-term it should be good enough). The FLIFX fund has a low expense ratio of 0.12. Any expense ratio over 0.3 is too much and is just eating into the amount of money that you can take out safely to live on.

With this $1.5 million in FLIFX, assume for now that you can take out about $50,000 per year indefinitely to cover or help with your expenses. You can adjust down the road if you need to, but this is a good starting point for now.

Then, take your time learning from this board and from the websites and books recommended by the good people here. Make any changes that you feel necessary.

HomeStretch
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Re: Where to start?

Post by HomeStretch » Mon Jan 13, 2020 2:50 pm

I am very sorry for your and your children's loss. You are not needy and no need to feel embarrassed. This forum can act (if you want it to) as a sounding board as you develop your plan.

It sounds like your immediate concern is cash for living expenses. Can your attorney help expedite the death certificate? Do you have access to a joint bank account or credit card? Any friends or family that will loan you money if your parents are tapped out after next month?

Agree with the suggestions from other posters to:
1. Park the life insurance proceeds somewhere safe and liquid for now
2. Check into the social security benefits available to your minor children and to you
3. Continue to rent for the short term
4. Take your time formulating your plan
5. PM Taylor Larimore for a copy of his latest book.

Some other items to consider:
1. Pull together a list of assets (look for statements in files or mail) like the Barclay's 401k account so you know what assets you have. You will need to get them retitled to you and to set up beneficiaries.
2. Pull together a list of any debts and credit cards. Are you the primary on any credit cards that can stay open? If not, try applying for something like the Citi Double Cash card.
3. Change over any utilities/phones to your name.
4. As you work with the attorney on settling your husband's affairs, if the attorney is an estate attorney please draft your own simple will including naming a guardian for your children ASAP.
5. If you do not have life insurance on yourself to provide for your children until they are self-supporting, consider level-premium term life insurance for $1 million+. You can get quotes easily online through selectquote.com (spouse used them and we liked them) or others mentioned on this forum like term4life.com and zander.
6. Start a folder for any tax documents that come in the mail. Find last year's returns. Did your husband do taxes himself or use a tax accountant?
7. Continue if you can to focus on completing your degree and finding employment (even part time) so you can become self-supporting.

Best wishes. Continue to post questions and updates as you need assistance.

PoppyA
Posts: 522
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Re: Where to start?

Post by PoppyA » Mon Jan 13, 2020 3:06 pm

So sorry for your loss and suffering. Just an FYI, in my experience credit card companies usually don’t require you to pay off balances if the card was in your husbands name. That may or may not bring you some relief.

You are getting great advice here. Take your time. An Attorney may be able to help you settle the estate. If it is uncontested, it should not be that expensive. Try to get a good attorney. Ask for recommendations from friends, professors, etc.

If you can concentrate, read the wiki for this site. It is located on the top left of this site.

Remember, you can only control you actions. Try not to let your mind race with thoughts of what others will do or did. From here on out, try to go to bed at night feeling proud of yourself based on the action you took that day.

Grt2bOutdoors
Posts: 21733
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Location: New York

Re: Where to start?

Post by Grt2bOutdoors » Mon Jan 13, 2020 3:09 pm

livesoft wrote:
Mon Jan 13, 2020 2:22 pm
3504PIR wrote:
Mon Jan 13, 2020 2:00 pm
.... Simply go to your bank and place the funds into a simple savings account...
Such advice turned out to be some of the worst possible advice for my widowed friend. It opened her up to a sales pitch by the in-house salesreps within the bank every time she went in there. The savings account was an atrociously low rate at well. Just saying' ...

Vanguard and Ally through their online web sites allow one to be much more incognito and unbothered. Furthermore, if one has never done online banking nor online investing, they get a babystep out of the way in terms of registering online, opening an account online, and transferring money online.
I agree with this.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

3-20Characters
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Re: Where to start?

Post by 3-20Characters » Mon Jan 13, 2020 3:10 pm

livesoft wrote:
Mon Jan 13, 2020 12:18 pm
BV3273 wrote:
Mon Jan 13, 2020 12:15 pm
As already mentioned depending on how large it is deposit it in an FDIC insured account(s) and wait until everything quiets down.
I do not believe that an FDIC-insured account is actually necessary. For instance, a Vanguard Money Market fund is not FDIC-insured and would be a very fine place to park money.
+1.

This is as good or better than FDIC.

VUSXX Vanguard Treasury Money Market Fund
https://investor.vanguard.com/mutual-fu ... view/VUSXX

I personally would be comfortable with this as well.

VMMXX Vanguard Prime Money Market Fund https://personal.vanguard.com/us/funds/ ... IntExt=INT

One big advantage of going this route is that you’d all be set up with a vanguard taxable account when you’re ready to invest the money for the long term. Vanguard is the best option (IMHO) for you because of choice of tax efficient mutual funds and low fees. At another brokerage, you may have equally good options but may need the knowledge to avoid poor (high fee options) or may need to use ETFs instead of mutual funds (not a big deal but I say keep it simple). If you decide that you need an advisor, vanguard has the lowest fees.

Next, establish a link from vanguard to your bank checking account to make transfers and pay for your expenses. Then, take care of emotional needs and begin the financial investment learning process.

Good luck!

jpelder
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Location: Concord, NC

Re: Where to start?

Post by jpelder » Mon Jan 13, 2020 3:41 pm

I'm so sorry for your loss, WhatNow. I can't even imagine the pain you're suffering right now. I echo the other posters' recommendations to seek out mental health support for yourself and your children. Your University may have a counseling center that can provide mental health support for you and/or your children.

If cash is short while you wait on the settlement of the life insurance and/or your late husband's next paycheck, you may be able to speak to your landlord and other billers. If you have an estate attorney already hired, they might be able to help you with this.

I also agree with the advice of parking the life insurance settlement funds in something like a bank savings account for the time being. Do not fall prey to the bank's "financial advisors" (just think of them as salespeople). Keep it in the savings until you spend more time around here. The good news is that investing doesn't actually have to be very complicated. If you want guidance on investing after you are ready to reach that point, this forum is a good place for it. Vanguard, Fidelity, and Charles Schwab are all good places, too, with some caveats.

The wiki here at Bogleheads has good information on how to allocate your money, what to look for in funds (expenses, commissions, etc.). In the investing world, sales commissions are often called "loads" (as in, 5% front-end load, 3% back-end load, 2% level load, whatever). The thing to remember is that there is no reason to ever pay a commission on mutual fund investing.

I am partial to Vanguard for my investment accounts. They are owned by their member funds, and they only sell low-cost investments. The customer service reps that you talk to on the phone are paid salary, not commission, so they don't have any incentive to give you misleading advice. Their biggest downside is that they do not have local offices or 24/7 phone service. You have to be ok with calling during the day or using their website. I've only had to call them a handful of times in the 6 or so years I've been investing with them, and that was only to deal with complex transfers from other financial institutions (the other places made it complex, not Vanguard)

In summary: keep paying the bills, work with your attorney on getting the life insurance and estate settled, take care of your and your children's mental health, keep the life insurance proceeds in a regular bank account, and then read the excellent information here to figure out the investing side. Also, speak with your professors about getting some flexibility this semester. It's going to be hard. Remember that grief is like a ball in a box: https://psychcentral.com/blog/coping-wi ... l-the-box/

Stormbringer
Posts: 889
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Re: Where to start?

Post by Stormbringer » Mon Jan 13, 2020 3:42 pm

The problem with a $1.5M payout is that while it is a lot of money, it isn't enough to replace $100K in annual expenses without running out after 20 years or so. If there are other assets, you'll need to track those down and get control of them. It doesn't sound like you are anywhere close to retirement age, so if you invest the money in a balanced portfolio of stocks and bonds, you should be able to safely draw 3% per year ($45,000) per year for the rest of your life, bumping it up by the rate of inflation each year, and have a pretty decent chance of leaving a sizable estate to your children some day. You will probably need to supplement that income by working, which was presumably your plan after you complete your degree.

It sounds like your children are minors, so they may be eligible for Social Security benefits.

I'd strongly recommend making a budget to figure out where you stand, and how much your expenses will be. That will help bring the financial picture into focus.
"Compound interest is the most powerful force in the universe." - Albert Einstein

3504PIR
Posts: 882
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Re: Where to start?

Post by 3504PIR » Mon Jan 13, 2020 5:04 pm

livesoft wrote:
Mon Jan 13, 2020 2:22 pm
3504PIR wrote:
Mon Jan 13, 2020 2:00 pm
.... Simply go to your bank and place the funds into a simple savings account...
Such advice turned out to be some of the worst possible advice for my widowed friend. It opened her up to a sales pitch by the in-house salesreps within the bank every time she went in there. The savings account was an atrociously low rate at well. Just saying' ...

Vanguard and Ally through their online web sites allow one to be much more incognito and unbothered. Furthermore, if one has never done online banking nor online investing, they get a babystep out of the way in terms of registering online, opening an account online, and transferring money online.
Thanks for providing that insight! I agree 100% and assume that could happen often unfortunately.

Topic Author
WhatNow1214
Posts: 10
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Re: Where to start?

Post by WhatNow1214 » Tue Jan 14, 2020 10:05 am

Grt2bOutdoors wrote:
Mon Jan 13, 2020 12:34 pm
I'm so sorry for your loss.

If you do place the monies in an FDIC insured account, you may want to title each account differently to ensure you will receive full insurance coverage. FDIC insurance coverage is currently $250,000 per account title. Here is a summary of how accounts can be titled and there is a link on that page to Electronic Deposit Insurance Estimator (EDIE) to assess your current situation. https://www.fdic.gov/deposit/covered/categories.html

Good morning,

Does this mean I need to open up six different accounts so the whole of the money is insured in full?

jpelder
Posts: 690
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Location: Concord, NC

Re: Where to start?

Post by jpelder » Tue Jan 14, 2020 10:40 am

WhatNow1214 wrote:
Tue Jan 14, 2020 10:05 am
Grt2bOutdoors wrote:
Mon Jan 13, 2020 12:34 pm
I'm so sorry for your loss.

If you do place the monies in an FDIC insured account, you may want to title each account differently to ensure you will receive full insurance coverage. FDIC insurance coverage is currently $250,000 per account title. Here is a summary of how accounts can be titled and there is a link on that page to Electronic Deposit Insurance Estimator (EDIE) to assess your current situation. https://www.fdic.gov/deposit/covered/categories.html
Good morning,

Does this mean I need to open up six different accounts so the whole of the money is insured in full?
Technically, yes. These could be different account types (checking, savings, money market, 3 different CDs, whatever). The bank will tell you which of their products are FDIC insured.
Last edited by jpelder on Tue Jan 14, 2020 11:04 am, edited 1 time in total.

livesoft
Posts: 69572
Joined: Thu Mar 01, 2007 8:00 pm

Re: Where to start?

Post by livesoft » Tue Jan 14, 2020 10:55 am

WhatNow1214 wrote:
Tue Jan 14, 2020 10:05 am
Does this mean I need to open up six different accounts so the whole of the money is insured in full?
Yes. It could mean at 3 or more financial institutions. OTOH, if you invested in US Treasuries at Vanguard or Fidelity, then you would also be guaranteed payment of interest and principal by the full faith and credit of the United States of America. That is, you would have just as much insurance and maybe more than FDIC insurance. You could use a Treasury-only money market fund, too, if this was your concern. Vanguard has one.

I have never understood why FDIC seems to be a requirement for people. Sure, it works for small amounts of money and is convenient for folks who want to be at banks, but it really is nothing special in my opinion.

But for you, imagine going into a bank and getting sold on 6 different accounts and interacting with the bankers that want a bigger piece of your pie. Ugh!
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3-20Characters
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Re: Where to start?

Post by 3-20Characters » Tue Jan 14, 2020 10:58 am

jpelder wrote:
Tue Jan 14, 2020 10:40 am
WhatNow1214 wrote:
Tue Jan 14, 2020 10:05 am
Grt2bOutdoors wrote:
Mon Jan 13, 2020 12:34 pm
I'm so sorry for your loss.

If you do place the monies in an FDIC insured account, you may want to title each account differently to ensure you will receive full insurance coverage. FDIC insurance coverage is currently $250,000 per account title. Here is a summary of how accounts can be titled and there is a link on that page to Electronic Deposit Insurance Estimator (EDIE) to assess your current situation. https://www.fdic.gov/deposit/covered/categories.html

Good morning,

Does this mean I need to open up six different accounts so the whole of the money is insured in full?
Technically, yes. These could be different account types (checking, savings, money market, 3 different CDs, whatever). The bank will tell you which of their products are FDIC insured.
To minimize accounts, you could open a checking/savings at ally or some other suitable online bank and keep an amount to pay for recurring expenses. Then put the bulk in:

VUSXX Vanguard Treasury Money Market Fund
https://investor.vanguard.com/mutual-fu ... view/VUSXX

For a discussion on why this is as safe or safer than FDIC, see this:
viewtopic.php?t=272414

So that’s 2 institutions and you’d have account at vanguard for future investments. Easy peasy.

Grt2bOutdoors
Posts: 21733
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Where to start?

Post by Grt2bOutdoors » Tue Jan 14, 2020 11:58 am

I agree with the use of a US Treasury only money market fund at Vanguard, I use it myself. Essentially, it owns US Treasury bills, are short term in maturity, pays competitive interest rate to a bank savings account, super liquid. Best part of all - no come on sales pitch by bank staff.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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