Inheriting $400K, What Would You Do? Goal is to Have $1M in 10 Years

Investing
1

43 years old. $150K/yr salary. $0 debt. 3% $340K mortgage, going to move in 6 years. $100K in current retirement.

I’d like to turn the $400K into $1M by 53 and then $2M by 60 for retirement.

I’m thinking 50% into QQQM and 50% into VTI. Plus, stash $14K into a Roth IRA (VOO) for 2024/2025. Do it all at once or DCA over 6 months?

What would you do?

2

Join r/bogleheads and go for a three-fund portfolio.

3

Vernon said:
Join r/bogleheads and go for a three-fund portfolio.

And they have a windfall wiki:

https://www.bogleheads.org/wiki/Managing_a_windfall

4

As general advice, this should be an accelerator to your existing plan, not a throw-your-plan-up-in-the-air scenario. So what does your existing portfolio look like? Is it 50/50 QQQM/VTI now? If not, why would having $400K more suddenly change your strategy? You were planning on getting to $400K via your own endeavors, weren’t you?

What form will the inheritance take? A regular inherited IRA creates a taxable burden, while inherited stocks may have a step-up in basis, making them tax-free. If it’s in a traditional inherited IRA, that tax burden could reduce what you actually receive.

You need to save more. With your salary, you should be saving over 15% on top of the inheritance.

5

@Skylar
Divorce 9 years ago made me start over. Buying a house and paying debts off made me stop investing. Child support doesn’t help. I’m currently 80% VTI and 20% QQQ. Just saw my QQQ doing a lot better than VTI the last 5 years.

Getting $130k from an inherited IRA and $340K from a house being sold. There will be some taxes.

6

@Yere2
QQQ has outperformed significantly, but remember that chasing hot sectors can be risky. If you don’t have a solid strategy that accounts for risk-adjusted returns, stick with a Boglehead approach. You need diversity—consider VTI/VXUS for uncorrelated assets.

7

You’re behind with retirement, but not so far that you need to take excessive risks. This windfall can help, but go with VTI and skip the growth funds.

8

VTI. $800 in seven years, and $1.6M in fourteen.
Probably faster with all these 30% ROI years.

9

Kiran said:
VTI. $800 in seven years, and $1.6M in fourteen.
Probably faster with all these 30% ROI years.

Is it dumb to put 50% into QQQ? I know it’s risky, but tech seems to be booming.

10

@Yere2
VTI is heavily tech-weighted already. Consider putting a bit into VGT or QQQ if you want more exposure.

11

@Yere2
Keep stocks diversified and have a plan to transition to bonds for retirement. Remember 2008’s peak experience.

12

@Yere2
Be cautious! If everyone is predicting a tech boom, it might already be priced in. Investment hype can lead to losses.

13

All in on Intel. You’re welcome.

14

Look into small caps if you’re feeling aggressive. They should perform well, but consider actively managed funds.

15

Sterling said:
Look into small caps if you’re feeling aggressive. They should perform well, but consider actively managed funds.

Mid caps have actually outperformed both small and large caps historically.

16

For right or wrong, I did what you’re planning. But have you thought about how you’ll react if the market drops 40%?

17

I think I would go 80/20 VTI to QQQM. VYI should help you reach your goal at around 9%.

18

S & P index fund—check back in 22 years.

19

Don’t tell anyone about the inheritance. Keep it to yourself.

  1. Make sure you have a 6-month emergency fund.
  2. Park your money in money markets until you’re ready.
  3. Max out 401k and invest in an S&P500 product, like VTI.
  4. Max out IRA. VTI works well with Vanguard.
  5. Plan for retirement carefully; you need to save more. I recommend budgeting and using YNAB.
20

See the Rule of 72. Interest rate times years to double investment equals 72. E.g. 400K at 7.2% should double in ten years.