What Should You Do After Inheriting $3 Million?

TL;DR

After inheriting $3.325 million in Apple stock, take time to adjust and avoid impulsive spending. It's important to pay off high-interest debts, set up a high-yield savings account, and consider diversifying investments to preserve and grow your wealth. Hiring a CPA and an estate attorney is crucial for managing taxes and protecting your inheritance for future generations.

Transcript

wow this is crazy my heart is racing and i don't know what to tell you because i'm speechless life can change so fast not for me but for this person on reddit who just basically won the lottery he inherited 7 000 shares of apple and right now each share of apple at the time of filming this video is about 475 dollars per share that means he just inh... Read More

Key Insights

• 🤑 Inheriting a windfall of money requires careful planning and consideration to preserve and grow wealth.
• 🔠 Taxes on inherited stocks are minimal due to the step-up basis, but capital gains taxes apply when selling.
• 🔂 Diversifying investments is crucial to avoid risking the entire windfall on a single stock.
• ✋ Paying off high-interest debts, setting up a high-yield savings account, and managing FDIC and SIPC insurance limits are important steps.
• 🫰 Investing in dividend yield ETFs, broad market index funds, and real estate can generate passive income.
• 📼 Protecting wealth for future generations requires hiring an estate and trust attorney and structuring the assets appropriately.

Questions & Answers

Q: How did the Reddit user inherit the Apple stock?

The user inherited the stock from their grandfather, who had invested his college fund in Apple in 2003.

Q: What taxes are involved in inheriting stocks?

The step-up basis allows for minimal taxes on inherited stocks, but capital gains taxes apply when selling them later.

Q: Should the user sell all their Apple stock immediately?

It is advised to diversify investments, selling most or all of the Apple stock and investing in different options to preserve and grow wealth.

Q: How much money should be put into real estate?

It is recommended to invest around 30% or roughly $1 million into real estate, either through real estate investment trusts (REITs) or rental properties.

Q: What should be done with the remaining cash?

Setting aside 10% of the windfall as cash is advised to provide a defensive investment during economic downturns.

Q: Should the user lend money to others or hire a financial advisor?

Lending money can start a never-ending cycle, and financial advisors often prioritize their own commissions. Stick to broad market index funds, ETFs, dividend stocks, and real estate investments.

Q: How can the user protect their wealth for future generations?

Hiring an estate and trust attorney is recommended to structure the wealth in a way that protects it from probate and potential creditors.

Q: Is it advisable to try day trading or options trading with the windfall?

It is advised to avoid day trading, options trading, and penny stocks to prevent gambling away the money. Stick to safer and more reliable investment options.

Summary & Key Takeaways

• A Reddit user inherits $3.325 million from 7,000 shares of Apple stock.

• The user is advised to take time to adjust and not make impulsive decisions.

• The step-up basis allows for minimal taxes on inherited stocks, but capital gains taxes apply when selling later.