I Received $225,000 from the 9/11 Compensation Fund after Being Diagnosed with Lung Cancer. How Should I Save and Invest It?
Asking for financial advice is always a smart move, and I commend you for that. You are already in a good place, financially, but inheriting such a large amount of money can be a game-changer. Here are some tips on how to use your windfall wisely:
1. Enjoy Your Life
You have gone through a lot, and you deserve to enjoy your life. Make yourself comfortable by investing in some home improvements, and treat yourself to some new clothes. Do not shy away from indulging in a few life luxuries, whether that is a new leather chair, window treatments, or kitchen cabinets.
2. Build an Emergency Fund
Always have an emergency fund ready, especially for unforeseen expenses such as medical bills. Financial experts recommend keeping at least six months’ worth of expenses in a high-interest savings account.
3. Focus on Financial Health
Invest a portion of your windfall into improving your overall financial health. According to Bryson Roof, a financial adviser, you should allocate 50% to 75% of your windfall towards your financial health. This could include topping off your retirement fund to $500,000 or working towards paying off any debts, among other things.
4. Think About Retirement Contributions
Retirement contributions should be an essential part of your plan. Max out your annual contributions to an IRA or participate in a 401(k) if your employer provides one. Determine your retirement timeline and invest in shares and bonds accordingly. If you are considering saving instead, look for a high-yield savings account.
Key Takeaways
1. Build an emergency fund and allocate at least six months’ worth of expenses.
2. Focus on improving your overall financial health.
3. Max out your annual contributions to an IRA and participate in a 401(k).
4. Determine your retirement timeline and invest in shares and bonds accordingly.
Related Facts
1. The best annual percentage yield on a one-year CD for an online bank is as high as 4.8%.
2. The highest annual percentage yield for a high-yield savings account is hovering around 5.1%.
3. The minimum investment to buy a Series I bond is $25, and the maximum investment is $10,000.
Conclusion
You have been through a lot, and you deserve to enjoy your life. Invest in upgrading your lifestyle and comfort by making your home more comfortable and treating yourself to new clothes and things that make you happy. Keep yourself financially stable by building an emergency fund, focusing on your overall financial health, and investing in retirement.
