Inheritance and Economic Outpatient Care for a Boglehead

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xystici
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Inheritance and Economic Outpatient Care for a Boglehead

Post by xystici »

I am curious to understand approximately how big or small are the components of inheritance and economic outpatient care for a Boglehead.

Please do the following for me:
1. Add all your inheritance money you have received throughout your life (inheritance)
2. Add all your economic outpatient care (defined as per The Millionaire Next Door, see below) you have received throughout your life (economic outpatient care)
3. Respond to this post with the result after calculating the following ratio:
  • (inheritance + economic outpatient care) / networth x 100%
Economic outpatient care by The Millionaire Next Door includes:
a. Funding of tuition you received from your parents/family for the private grade school and/or private high school of your kids
b. Funding of tuition you received from your parents/family for graduate school
c. Funding you received towards your mortgage from parents or family
d. Financial assistance you receive towards your house / other properties from parents/family/friends
e. "Forgiveness loans" (those not to be repaid) you received from parents/family/friends
f. Transfer of commercial real estate you received from parents/family/friends
g. Gifts of listed stocks or other securities you received from parents/family/friends
h. Gifts of ownership (all or part) of family business you received from parents/family/friends

Notes:
A. Please include all assets including properties/home in your networth number
B. Undergraduate college support by your parents/relatives is not considered EOC. So, please do not include undergraduate tuition costs. But do include graduate costs.
Last edited by xystici on Sun Jun 07, 2015 12:54 pm, edited 2 times in total.
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by Ron »

0%

- Ron
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by LeisureLee »

It's about 3.1% for my wife and me - our parents paid for tuition, room and board for college for us.

This question as posed may not tell you what you want to know, because gifts longer ago could've grown substantially by now. You might be able to get a sense of some of this from the "net worth" survey thread data - I think they had some columns about inheritances and windfalls.
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by Boglegrappler »

Essentially 0 for me. I'm expecting that computation to be much larger for my children.
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by Carefreeap »

0% from my folks. In fact I was cut-off when I was 13. Does that mean my parents owe me? :confused

DH went to private school most of his life. Mom paid for most of his public CA University. I really have no idea how to calculate those costs. I suspect that between the two us we're close to even.

We were already millionaires by the time DH got his inheritance at age 40. The inheritance and our LBYM allowed us to retire about 10-15 years before our peers at age 53 and 50.

What is your point? We would be self-sustaining in almost any situation.

My concern is more with folks who are so dependent on tax-payer funded systems that they never are economically independent.
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by prudent »

Can I subtract EOC we have provided to others?
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by Netherworld »

O% also.
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by KyleAAA »

Roughly 15%, owing entirely to college costs.

EDIT: if undergraduate tuition and room/board doesn't count, then probably less than 2%.
Last edited by KyleAAA on Sun Jun 07, 2015 6:02 pm, edited 1 time in total.
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by xystici »

LeisureLee wrote:This question as posed may not tell you what you want to know, because gifts longer ago could've grown substantially by now. You might be able to get a sense of some of this from the "net worth" survey thread data - I think they had some columns about inheritances and windfalls.
For sure. By any means a perfect number but should give a hint whether Bogleheads have been financially assisted with inheritance and EOC throughout their lives. Thanks for your response.
Last edited by xystici on Sun Jun 07, 2015 12:04 pm, edited 1 time in total.
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by xystici »

Carefreeap wrote:We were already millionaires by the time DH got his inheritance at age 40.
Do you mind proving a number taking into account the inheritance of your DH?
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by stan1 »

3% (life insurance benefit from my father which he should have stopped premiums on years earlier and from my share of the proceeds from some low value vacant land he bought before I was born). My parents did also pay for my undergraduate education, but per your criteria that's not included.
Last edited by stan1 on Sun Jun 07, 2015 12:03 pm, edited 1 time in total.
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by xystici »

prudent wrote:Can I subtract EOC we have provided to others?
I am sure this is money you spent very well but for the purposes of the question, better not subtract it. Thanks.
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by prudent »

xystici wrote:
prudent wrote:Can I subtract EOC we have provided to others?
I am sure this is money you spent very well but for the purposes of the question, better not subtract it. Thanks.
OK, then 12% is my answer.
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by cherijoh »

My parents paid for most of my undergraduate study at an in-state public university, but based on your definition I don't think that falls under EOC. I paid for graduate school and never received any other EOC.

I did receive an inheritance, which at the time I received it boosted my net worth by about 25%. However, that was before the great recession, so my net worth has increased substantially since then. If I follow the OP's formula, I come up with ~15%.
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by jackholloway »

Some costs are subtle.

My parents bought a house within walking distance of the best public school in the state. That probably cost them 25% more than a house that would have met their needs but far from school. Compound the lost money for the 30 years since I went there, and note that property values have not kept up, so we are not getting it back in the estate. A private school of similar caliber would have cost more up front with no chance of getting it back at sale.

Roughly 20% of my current net worth came from my parents as part of an inheritance. I was, to put it mildly, surprised at the final number. They had always lived like Bogle heads – always paying cash for cars,keeping them for a decade or more, and always shopping for the very lowest prices for the things they wanted.

When I went to college, it was one of the most expensive in the country. On graduating, I never had trouble finding work. More importantly I've always been well paid for the industry I'm in. Add to that, the safety produced by my parents being able to back students loans when the economy went south. I finished my degree on time; some friends did not because they had to cover a funding gap.

Finally most of my industries have had some amount of pure research support from federal grants from the NIH, the NSF, and the NCC. I suspect I would've found valuable work to do without those grants, but having them meant that I could follow my passion and my interest. If nothing else I could not of studied some of the fascinating things I did in grad school without my professors having similar grant structures supporting them. Is that EOC? It certainly is part of how I've been a success.

All in all, Iave benefitted greatly from a safety net, from parental support, and from societal investment, and it is hard to pin down how much in dollars. This is why I look at my inheritance as a trust for future generations.
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by lhl12 »

xystici wrote:I am curious to understand approximately how big or small are the components of inheritance and economic outpatient care for a Boglehead.

Please do the following for me:
1. Add all your inheritance money you have received throughout your life (inheritance)
2. Add all your economic outpatient care (defined as per The Millionaire Next Door, see below) you have received throughout your life (economic outpatient care)
3. Respond to this post with the result after calculating the following ratio:
  • (inheritance + economic outpatient care) / networth x 100%
Economic outpatient care by The Millionaire Next Door includes:
a. Funding of tuition you received from your parents/family for the private grade school and/or private high school of your kids
b. Funding of tuition you received from your parents/family for graduate school
c. Funding you received towards your mortgage from parents or family
d. Financial assistance you receive towards your house / other properties from parents/family/friends
e. "Forgiveness loans" (those not to be repaid) you received from parents/family/friends
f. Transfer of commercial real estate you received from parents/family/friends
g. Gifts of listed stocks or other securities you received from parents/family/friends
h. Gifts of ownership (all or part) of family business you received from parents/family/friends

Please include all assets including properties/home in your networth number
Your list for EOC includes private school tuition and graduate school tuition, but not college tuition. Shouldn't college tuition also be on the list?
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by tj »

lhl12 wrote:
xystici wrote:I am curious to understand approximately how big or small are the components of inheritance and economic outpatient care for a Boglehead.

Please do the following for me:
1. Add all your inheritance money you have received throughout your life (inheritance)
2. Add all your economic outpatient care (defined as per The Millionaire Next Door, see below) you have received throughout your life (economic outpatient care)
3. Respond to this post with the result after calculating the following ratio:
  • (inheritance + economic outpatient care) / networth x 100%
Economic outpatient care by The Millionaire Next Door includes:
a. Funding of tuition you received from your parents/family for the private grade school and/or private high school of your kids
b. Funding of tuition you received from your parents/family for graduate school
c. Funding you received towards your mortgage from parents or family
d. Financial assistance you receive towards your house / other properties from parents/family/friends
e. "Forgiveness loans" (those not to be repaid) you received from parents/family/friends
f. Transfer of commercial real estate you received from parents/family/friends
g. Gifts of listed stocks or other securities you received from parents/family/friends
h. Gifts of ownership (all or part) of family business you received from parents/family/friends

Please include all assets including properties/home in your networth number
Your list for EOC includes private school tuition and graduate school tuition, but not college tuition. Shouldn't college tuition also be on the list?

Maybe it's expected that the parents fund undergraduate?
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by Kenkat »

About 2%
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by xystici »

lhl12 wrote:Your list for EOC includes private school tuition and graduate school tuition, but not college tuition. Shouldn't college tuition also be on the list?
If I understood The Millionaire Next Door correctly, undergraduate college support by your parents/relatives is not considered EOC. So, please do not include undergraduate tuition costs. But do include graduate. Thanks. I will make a note in the initial post to make it more obvious.
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by kaudrey »

Why are you asking?

0%. DH and I have been independent since graduating college; 3 out of 4 parents are still alive.
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by TSR »

This is an interesting question. I find myself at 0%, but I don't think that adequately accounts for the privilege I've had in my life. I see why the figure would not include college, but I went to a very expensive college and a very expensive private school before that. Also, I will say that I have taken two loans from my father, both of which he expected me to pay back, and both of which I paid back in short order. Those don't appear to qualify for the EOC (if I'm reading it right), but both helped me significantly at important times. My parents have always been good about expecting me to pay for things (as I did for graduate school) and teaching the importance of self-reliance, but the very presence of that safety net has allowed me a great deal of freedom to take some risks, including paying for my own grad school, because I knew that they probably wouldn't leave me to starve if things went south. That's quite a privilege. I should also note that both of my parents are alive, so no inheritance. When they do pass, I'd anticipate some small amount, none of which I am counting on. I also don't have children, so my parents have been unable to offer to assist with that.

I'll be curious to see what kind of answers you get, but I'd also expect that people with higher percentages will answer in smaller numbers than those with lower percentages.
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by Ybsybs »

0.5% This surprised me. I'd thought it was zero, but then I remembered I actually got a bit of money from a grandparent that let me buy my first car. The goal is to give more back to the next generation.
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by stoptothink »

Carefreeap wrote:0% from my folks. In fact I was cut-off when I was 13. Does that mean my parents owe me? :confused
Same. In fact, after finishing undergrad (on a full athletic scholarship), I began helping out my mother financially as I was putting myself and my wife through grad school. She raised five children on her own, on a medical assistant's pay, there was no possible way she was helping us out financially regardless of how much she would have liked to. We are also planning on helping out both my mother and in-laws financially within the next decade or so; both are getting close to retirement age, have nothing saved for retirement and a lot of debt, and we are the only one's on either side of the family in a position to help out. Our current home search includes something with a mother-in-law apartment, because her parents are very likely going to be moving in with us.
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by JDCarpenter »

Either 0% or 2.85%. The instructions do not include grandparents' partial assistance with our kids' undergraduate expenses. Assuming that should have been included? If so, the 2.85.
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by downshiftme »

Some costs are going to be hard to include, like living in a good school district or a generally positive upbringing.

inheritances: 0
school fees: public school, but there were always fees for activities. No idea how to account for these.
College tuition: undergrad+living expenses 100% paid by parents. Apparently these are excluded.
Real estate, businesses, other EOC (excluding incidental gifts): 0

So I guess by these definitions it comes up zero.

At some point I may get a future inheritance. I'm hoping it will be zero (meaning parents used their assets or decided on some kind of generation skipping) but it could more than 2x my net worth, instantly moving my ratio from 0% to 70%

OP: What do these ratios tell you?
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by Purelife304 »

Zero %
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by BolderBoy »

0.051%

I didn't realize it was so tiny.
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by Sandi_k »

1%.

My husband received a $10k gift from his grandparents when we bought our first home in 1992.
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by Tamahome »

0.43% Unfortunately, it was very recently received after the passing of my last remaining grandparent.

I did have the advantage of a loan from my mother in starting my firm 11 years ago, but that was only because she offered a lower interest rate than the bank would give me in an unsecured business loan. That loan was paid back in full (with interest), so I did not include it. There is an undeniable benefit to having the 2% lower interest rate, however. I believe the original loan was $35,000, and it was for 3 years.
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by Rodc »

About 4%.

I think the definitions are very weird though. Grade school tuition is not outpatient care as you have to be old enough to be out of the house before the concept makes any sense. (wife and I went to public schools do it does not apply, but I still do not agree with it). And clearly undergrade is something of a grey area. I have no issue with not including it, but then don't toss in grade school.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by Rodc »

It would be worth knowing if parents are still alive. We were at 0% until all our parents passed away.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by Carefreeap »

Rodc wrote:It would be worth knowing if parents are still alive. We were at 0% until all our parents passed away.
And some of us were left with negative estates! I wonder if I get to subtract that against my DH's positive inheritance. :?:
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by Ged »

10%, which was due to the passing of my parents during the last 5 years or so. Otherwise the only direct support was their paying for my college tuition.

Of course there was lots of indirect support including their choosing to buy a home in a location with excellent public schools, but that doesn't seem to be part of the menu here.
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by Rodc »

Carefreeap wrote:
Rodc wrote:It would be worth knowing if parents are still alive. We were at 0% until all our parents passed away.
And some of us were left with negative estates! I wonder if I get to subtract that against my DH's positive inheritance. :?:
You had bills you chose to honor beyond what they left?

Sorry to hear that. Losing a parent under any circumstance is difficult.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by Carefreeap »

Rodc wrote:
Carefreeap wrote:
Rodc wrote:It would be worth knowing if parents are still alive. We were at 0% until all our parents passed away.
And some of us were left with negative estates! I wonder if I get to subtract that against my DH's positive inheritance. :?:
You had bills you chose to honor beyond what they left?

Sorry to hear that. Losing a parent under any circumstance is difficult.
Some. The estate was upside down by about $400k I was able to settle with the second (about $300k) on her condo for about $10k. It took about 8 months and went to the brink of the Trustee's Sale. I kept paying on her IRS debt (total at TOD $40k) until it aged off at the 10 year mark. I explained the situation to the CCs who were the most difficult. While I sent the info 3x I finally told them to stop calling and disconnected the number.

Oddly enough going through this difficult process helped a lot with the grieving process. I essentially spent close to a year in her home first taking care of her, then dealing with the negotiations, disposing of her clothes and furniture and eventually renting out the property.

My dad will leave me a pile of junk to deal with. I will likely need to pay for a dumpster to get rid of his stuff and there will be no money to pay for it. I just don't want to leave his girlfriend with a big mess. She is a kind lady who doesn't need to deal with that.
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by KlangFool »

OP,

How about negative?? I partially supported my windowed mother when I started working until her passing at 75 years old.

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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by KlangFool »

OP,

I think you asking wrong question to Bogleheads. For this particular group of people, it is more likely that we are the GIVERS of EOC than the RECIPIENTS.

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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by jane1 »

0%

Or -ve
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by 2stepsbehind »

What this thread illustrates to me is how easily it is to point to the privileges of others while ignoring some very real privileges likely experienced by the authors. How else can you explain that undergraduate education does not count nor living in a neighborhood/school system where more than XX% of graduates go on to college? Is someone really going to say someone who got a full ride to undergrad, but got 20k from their parents for grad school has received more economic outpatient care than someone whose parents shelled out 100k for undergrad? What about allowances provided K-12?
Moreover focusing on hard asset transfers ignores the very real cultural and intellectual capital that is transferred. Even if "ownership" of a family business isn't transferred what about working in the same company as a parent or employment or internships through family friends?
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by xystici »

KlangFool wrote:OP,

I think you asking wrong question to Bogleheads. For this particular group of people, it is more likely that we are the GIVERS of EOC than the RECIPIENTS.

KlangFool
I am not sure what to expect, that is why I posed the question. So far the number of respondents is small and the majority of answers are in the 0% to 10% range. I was expecting to see a few posts above 100% but nothing so far. I am confident there are Bogleheads that have received important EOC/Inheritances throughout their lives in comparison to what they were able to accumulate.
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by gloomydog »

I received a cash gift for grad school. But I've since more than repaid that amount in annual financial contribution to my parents. And the same or increased contribution is expected each year. My parents view their children as their retirement investment.

So I'm going to list mine at 0%.

Maybe there are some few bogleheads who received very large EOC yet were able to still retain their boglehead philosophy but I suspect the EOC would have come well after the boglehead attitude is developed. The pressure and stress I've encountered in my life made me the person I am today.
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by IowaFarmBoy »

Given all the other posts, I'm almost embarrassed to post this. We are at about 40% but are mid-50s and all parents are gone so we have gotten some inheritance. I anticipate that it will drop to 20% by the time we retire as we build up more savings. There are so many different ways these numbers can be skewed- hold old a person is, are parents still alive, how long ago did you receive the inheritance and how much has it grown since, etc......
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by tomd37 »

For item b, I started college 60 years ago this year and have no idea what the annual cost was for a private small university. Back then I did not even know what my father's income was. Answer to all other items is $0.
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by SDBoggled »

At the time it was received, inheritance was probably 30%-40%, now down to just under 20% and continues to fall. We have definitely benefited from the extra security, but has been 100% invested to provide an extra buffer in retirement and leave to our estate.
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by letsgobobby »

Why is parent assistance for children's private K-12 counted but not their assistance for children's college or graduate school?

Why is parent assistance for my own private college education not counted?

Why are gifts of listed stock/securities counted but not gifts of cash?

If I follow the rules precisely then my answer is about 1%. Adding in a wedding gift, and contributions to our kids' 529 plans, closer to 4%.

Adding in the privately funded elite university education, 17 years of room/board, summer camps and soccer cleats, not to mention loving parents who gave a shit... priceless.
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by Simple Simon »

1. A gift to help wife & I buy our first home. The gift was >100% of our net worth at the time, we had almost nothing.
2. An inheritance when a parent died too young. Again, this was >100% of our net worth as we were still starting out.
3. An inheritance when a grandparent died which was greater than 1+2.

Taking the raw numbers 1+2+3 and dividing by current net worth gives 7.1%, but this doesn't explain how much impact those early cash injections had. They were the platform on which we built.
25% stock, 25% bonds, 25% cash, 25% stuff
Buckeye
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by Buckeye »

6%

Vast majority in the form of gifts during my 20's and 30's. Very little total inheritances.
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Crimsontide
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by Crimsontide »

So far, 0%
Grt2bOutdoors
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by Grt2bOutdoors »

2%. No inheritances, nor do I expect one.
The amount above is trivial compared to the intangibles provided. That is as "LetsGoBobby" says is Priceless!!!
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Crow Hunter
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Re: Inheritance and Economic Outpatient Care for a Boglehead

Post by Crow Hunter »

36%

-My parents gave me a used 1992 Lumina while I was in college. ~$8,000 when I traded it in on my 1999 Silverado in 1998 IIRC.
-They partially subsidized my undergraduate degree that wasn't covered by scholarships. (Not counted)
-They let me take a loan against a CD they had to get a significantly lower interest rate when I bought my wife a 2001 Corolla that I paid off in 4 months. (Not counted)
-A few years ago my Mom gave my brother and myself $30,000 each.
-I unfortunately inherited a significant sum (to me) last year when my Mom passed away ~$500k

However, more importantly, my parents gave me a "leg up" emotionally. They were both HS graduate blue collar workers with my Mom's parents being sharecroppers and my Dad being the first in his family to graduate high school. They always stayed after me to do well in school and to save money and invest wisely. I graduated from a fragmented rural high school with 62 people in my graduating class and a very poor math curriculum yet still graduated with a BS in Mechanical Engineering and have been gainfully employed as an engineer since graduating college. Without my parents being there for me and encouraging me, I would not be where I am today. That, I believe, is much more valuable than money.

I would much rather still have my parents emotional support than their money. My Dad died 11 years ago at 62 and my Mom last year at 68. :(
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