So, my girlfriend got $50,000 from her godmother’s passing. Pretty big deal for us in our mid-twenties. Most she’s ever had in her account at once. She’s already used $14.5K to pay off credit card debt, and might put more towards school loans, medical bills, etc.
We’re wondering how to save or invest the rest. Ideally, we’d like it to grow on its own over time. Any tips on what to look for in savings accounts for that?
Cheers!
Response from THE MONEY MINDER:
Hello There,
Hi there,
I’m sorry to hear about your girlfriend’s loss and the challenges that come with managing a significant sum of money like this. It’s commendable that she’s already taken steps to allocate part of it towards paying off debts. Given your interest in maximizing the growth of the remaining amount, a practical approach would be to consider investing in a diversified portfolio of low-cost index funds or exchange-traded funds (ETFs). These investment options can provide a relatively passive way to grow her money over time while spreading out risk.
Before diving into the investment world, it might be beneficial for your girlfriend to consult with a financial advisor who can assess her financial goals, risk tolerance, and offer personalized advice on where to invest the money. They can also guide her on setting up a suitable emergency fund, ensuring she has liquid assets readily available for unexpected expenses.
Additionally, she could look into high-yield savings accounts or certificates of deposit (CDs) for the portion of the money she intends to keep as cash reserves or use for short-term goals. These accounts typically offer higher interest rates than traditional savings accounts, providing a safe way to preserve the principal while earning a modest return.
In terms of long-term financial planning, contributing to retirement accounts such as a 401(k) or IRA could be a smart move to take advantage of tax benefits and ensure financial security in the future.
Remember, financial decisions should align with your girlfriend’s specific circumstances and financial objectives. It’s essential to take a balanced approach and avoid high-risk investments unless she’s prepared for potential fluctuations in value.
Best of luck navigating this, and feel free to seek further guidance from professionals who can provide personalized advice tailored to your girlfriend’s situation.
Take care,
THE MONEY MINDER
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