best use of 750k Cash

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vanpan
Posts: 14
Joined: Thu Aug 03, 2017 5:52 pm

best use of 750k Cash

Post by vanpan » Thu Feb 13, 2020 11:23 am

My father recently gave me 750K cash and I need some advice on how to use it. His main intent was we upgrade to a better home. I have been uncomfortable buying a new home and he said to keep the money and utilize however you want. We are a family of 4 (kids are 0 and 7). Our home is 3bed/2 bath 1800 sqft and we have decent schools 8/10, not the best.

Financial Situation

Annual Income (wife + me) - 650K
Current home - 1.3M value, 300K left on a mortgage ( we pay ~2000 for a 15 year fixed load)
Rental home - 1.05M value, 450K left on a mortgage ( i am -500 cash flow -ve on a 15 year fixed loan)
Retirement accounts - 600K ( mostly 400K FSTVX + 200K aapl)
Taxable accounts - 700K ( 400K FSTVX + 300K of FANG stocks)
No other debt.

I feel i have a few options and listing in order of priority. Please advise, also let me know any other options ....

1. One time purchase of 750K VTI or FSTVX
2. Periodic within one year purchase of 750K VTI or FSTVX
3. Pay off the mortgage on my current home and invest rest in VTI/FSTVX.
4. Spend a 100K to finish a basement in our home and use the rest in VTI/FSTVX
4. Think about upgrading to a new home (2.2M). Sell current rental property, put 750K + 600k Proceeds from the rental property down and take a 850K loan. You probably will never need to upgrade from here. But I really don't like this option because of Property tax as well as so much investment for us just sitting in the home.

Let me know your thoughts ....

lakpr
Posts: 3976
Joined: Fri Mar 18, 2011 9:59 am

Re: best use of 750k Cash

Post by lakpr » Thu Feb 13, 2020 11:35 am

Being a father of two kids myself, I would not understate the importance of being in a good to excellent school district. "Okay" sometimes just doesn't cut it. I can understand if buying in such a school district puts a lot of crimp in your budget and lifestyle; but it looks like the $750k gift from your father (very generous of him!) will make it possible for you.

I'd suggest you look for a similarly modest home but in a top-rated school district nearby. That would be the best use of money in my opinion.

teelainen
Posts: 209
Joined: Fri Feb 01, 2019 1:17 am

Re: best use of 750k Cash

Post by teelainen » Thu Feb 13, 2020 4:23 pm

vanpan wrote:
Thu Feb 13, 2020 11:23 am
Current home - 1.3M value, 300K left on a mortgage ( we pay ~2000 for a 15 year fixed load)
Rental home - 1.05M value, 450K left on a mortgage ( i am -500 cash flow -ve on a 15 year fixed loan)
Pay off both mortgages. Going to sleep at night knowing that you have no debt is good for your health, which is your most valuable asset.

retired@50
Posts: 1360
Joined: Tue Oct 01, 2019 2:36 pm

Re: best use of 750k Cash

Post by retired@50 » Thu Feb 13, 2020 6:43 pm

What is FSTVX? I don't find a matching ticker symbol.

I might use some of the money to pay the cap gains taxes on the 300K of FANG stocks and get out of those positions. Same with AAPL in the retirement account, although no tax implications.

Regards,
Boggle - a game from Parker Brothers. Bogle - investor, founder of Vanguard.

User avatar
Duckie
Posts: 7072
Joined: Thu Mar 08, 2007 2:55 pm

Re: best use of 750k Cash

Post by Duckie » Thu Feb 13, 2020 6:57 pm

retired@50 wrote:What is FSTVX? I don't find a matching ticker symbol.
FSTVX was the ticker symbol for Fidelity Total Market Index Fund Premium Class. All of the classes were merged into FSKAX a couple of years ago.

Dottie57
Posts: 7816
Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: best use of 750k Cash

Post by Dottie57 » Thu Feb 13, 2020 7:02 pm

How what is evaluated to determine whether a school district is good, decent, excellent?

I think dad’s intent is to help education of grandchildren. Make sure there is money for post secondary school f some sort.
Last edited by Dottie57 on Thu Feb 13, 2020 7:05 pm, edited 1 time in total.

MishkaWorries
Posts: 43
Joined: Wed Aug 14, 2019 4:39 pm

Re: best use of 750k Cash

Post by MishkaWorries » Thu Feb 13, 2020 7:04 pm

Private school for the kids?
We plan. G-d laughs.

Independent George
Posts: 614
Joined: Wed Feb 17, 2016 12:13 pm
Location: Chicago, IL, USA

Re: best use of 750k Cash

Post by Independent George » Fri Feb 14, 2020 12:14 am

I assume you've already written a check to the IRS. $750k in cash is almost certainly going to be reported by your bank.

You already seem pretty secure financially, so there's really no wrong answer on what to do with the rest. Paying off a mortgage is not mathematically the best thing to do, but it probably adds the most peace of mind. Do you have a 529 plan for your children?

beernutz
Posts: 65
Joined: Sun May 31, 2015 12:50 pm

Re: best use of 750k Cash

Post by beernutz » Fri Feb 14, 2020 12:28 am

Independent George wrote:
Fri Feb 14, 2020 12:14 am
I assume you've already written a check to the IRS. $750k in cash is almost certainly going to be reported by your bank.

You already seem pretty secure financially, so there's really no wrong answer on what to do with the rest. Paying off a mortgage is not mathematically the best thing to do, but it probably adds the most peace of mind. Do you have a 529 plan for your children?
Why would the receiver of the gift write a check to the IRS?

shess
Posts: 408
Joined: Wed May 17, 2017 12:02 am

Re: best use of 750k Cash

Post by shess » Fri Feb 14, 2020 1:55 am

vanpan wrote:
Thu Feb 13, 2020 11:23 am
4. Think about upgrading to a new home (2.2M). Sell current rental property, put 750K + 600k Proceeds from the rental property down and take a 850K loan. You probably will never need to upgrade from here. But I really don't like this option because of Property tax as well as so much investment for us just sitting in the home.
You have a pretty good income, so you can probably swing it - but this was the option which immediately made me nervous. Personally, if I were to upgrade, I'd split the cash in half, and use no more than half towards upgrading, and the rest to help defray the indirect costs over time of the upgrade (additional furniture and maintenance and property taxes and feature creep and ...).

That said, we upgraded from a ~$1M house to a ~$2M house because the kids were growing and we decided we'd rather carve out some of our portfolio and live in it, versus leaving even more behind when we die, and I'm quite happy with that decision. The yard is only a little bigger, but the house is around 10% bigger per room, with bigger closets, plus an additional room ("TV" room) and a loft/project area, and the ceilings are all higher, and the bathrooms are more comfortable - these all sound minor individually, but it really did shift us from feeling a bit cramped to not feeling cramped at all. Plus a nicer neighborhood with at least some services in walking distance. It all pays off in daily dividends, IMHO. So, while I wouldn't condone splashing out on an upgrade just because you have the money, I do think it's reasonable to step back and think on whether there's anything that will drag at you when your 7yo is 16, and your newborn is 9.

Monsterflockster
Posts: 92
Joined: Thu Nov 21, 2019 12:03 am

Re: best use of 750k Cash

Post by Monsterflockster » Fri Feb 14, 2020 2:05 am

vanpan wrote:
Thu Feb 13, 2020 11:23 am
My father recently gave me 750K cash and I need some advice on how to use it. His main intent was we upgrade to a better home. I have been uncomfortable buying a new home and he said to keep the money and utilize however you want. We are a family of 4 (kids are 0 and 7). Our home is 3bed/2 bath 1800 sqft and we have decent schools 8/10, not the best.

Financial Situation

Annual Income (wife + me) - 650K
Current home - 1.3M value, 300K left on a mortgage ( we pay ~2000 for a 15 year fixed load)
Rental home - 1.05M value, 450K left on a mortgage ( i am -500 cash flow -ve on a 15 year fixed loan)
Retirement accounts - 600K ( mostly 400K FSTVX + 200K aapl)
Taxable accounts - 700K ( 400K FSTVX + 300K of FANG stocks)
No other debt.

I feel i have a few options and listing in order of priority. Please advise, also let me know any other options ....

1. One time purchase of 750K VTI or FSTVX
2. Periodic within one year purchase of 750K VTI or FSTVX
3. Pay off the mortgage on my current home and invest rest in VTI/FSTVX.
4. Spend a 100K to finish a basement in our home and use the rest in VTI/FSTVX
4. Think about upgrading to a new home (2.2M). Sell current rental property, put 750K + 600k Proceeds from the rental property down and take a 850K loan. You probably will never need to upgrade from here. But I really don't like this option because of Property tax as well as so much investment for us just sitting in the home.

Let me know your thoughts ....
That three bedroom is going to get a lot smaller now the second child is here.

msk
Posts: 1470
Joined: Mon Aug 15, 2016 10:40 am

Re: best use of 750k Cash

Post by msk » Fri Feb 14, 2020 2:21 am

vanpan wrote:
Thu Feb 13, 2020 11:23 am
3. Pay off the mortgage on my current home and invest rest in VTI/FSTVX.
4. Spend a 100K to finish a basement in our home and use the rest in VTI/FSTVX
For peace of mind and adding more room as the kids grow, I would do these two. Many of us think of "forever home" as possible. Not sure whether such homes actually ever are forever and last through the entire kids' growing up. I would move only if the refurbishment/basement finishing of my existing home is no longer satisfactory or I expect it to be unsatisfactory for whatever reason. No matter whether I move or not, I hate having any debt on my home. Hence my priority is no mortgage on my home, existing or new. The rental property is a side business with concentrated risk, like the AAPL stock. With a $650k income I suspect that you and DW are better judges of such concentrated risks than I am.

Jimsad
Posts: 221
Joined: Mon Mar 20, 2017 5:54 pm

Re: best use of 750k Cash

Post by Jimsad » Fri Feb 14, 2020 6:53 am

With your income , you will be more than ok in the future .
So what is the point of living in a cramped home only to have a million more in the bank that you will not use in your life time ?
.
You should spend more for better quality of life for you and your family as you can easily afford it .
Your family probably will be happier in a bigger house

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