$80,000 Trust Fund....What would you do?

Of course, such an extravagant title needs an explanation. Here goes.

My son, when he was five years old, was run over by a lawnmower. It took off half of his right foot, and a nice chunk of calf muscle. It happened on my parent's property, and was done by my brother, who was mowing the lawn at the time. I was at work when I got the call. They life-flighted him to the Cleveland Clinic in Ohio, and I never left his side until he was discharged from the hospital. Several skin grafts later, we brought him back home.

We had to change his dressings for many months, and I had to teach him how to walk again. That WHOLE experience was one of the worst in my life. Here are some pics from 1 year later, at age 6.


Cute little guy, my firstborn son, aye?


The remainder of his foot, well-healed.


His leg showing the chunk of calf muscle missing.

That was 13 long years ago. My father's property insurance paid out the max, $100,000, and after doctor and attorney fees, $80,000 was set aside into a trust fund. The money was released yesterday. He is graduating in June of this year from HS, and going to a local university.

He's adapted well, and has played JV soccer for the past 3 years, the track team for 3, and is very computer literate like his dad. He's the videographer for the AV club, and is graduating with a 3.95 GPA. I'm proud of him.

I divorced his mother when he was 8 years old, the situation off-topic, and her and I have remained amicable over all those years. We've both re-married since, and now it's time to discuss what to do with the money.

At 18, he wants to buy a $2000.00 laptop right away, off newegg.com. I say you can get a top of the line for about $700.00 at Walmart. It will be outdated in a year anyway. The lump sum is going to be deposited into one bank, in one account, then it will be up to us as parents to decide how to invest. His mom, mind you, is remaining on the account. The current thoughts are to open a new account, at another bank, move a substantial sum, and then invest in 1, 3, and 5 yr CDs. (My plan.) I know the interest rates are down to 1-2%, so are CD's the wisest investment?

First year tuition is $20,000. He's living on campus. His first year is completely paid for.

So, ATS, have at it. Let me hear your thoughts.

It's his money, and you two should stay out of it.

If he spends it, he spends it.

If he is smart with it. He should be okay for next couple of years.

The choice is his. Not yours and not your ex-wife's.

I wouldn't dare tell you how to invest your money but I did want to offer my congratulations on raising a great kid.
He took the adversity of that experience and put it towards his own dreams.
Best wishes on his College days!

Manhater has a point.
Maybe give him half and you invest the other half for him?

id get an apartment and membership at a top MMA gym.

oh and an 02 ws6 trans am

He's got college paid for, for the most part. Can't go wrong investing in yourself, especially nowadays where its a must. At least he'll have less debt accumulated by the time he's done, an amount greatly more manageable than most people would be left with.

EDIT: Hope he doesn't go into Audio/Video Production

reply to post by Druid42

First, glad to hear he has recovered and continues to thrive as a young adult. I was thinking about not just people's biggest investments/costs in life, but the most useful as well, and I think some of the money should be used for down payment on a house, since it is a buyers market right now, and getting a good vehicle that will be dependable and require minimum maintenance(Toyota or Honda maybe). So maybe 20 grand on a home deposit and 10 grand on good used vehicle. I would also consider his passions or hobbies and maybe get him some decent tools/equipment for whatever his interests are.

Best wishes,
spec

reply to post by Manhater


I know that. Thanks for the comment. In fact, I have no control over it at all. I was hoping some financial savvy people on ATS would lend some sound advice that I could relay to him.

If I had had 80k to blow when I was 18, I would've. I'd like for him not to do that, but the money IS his for him to spend.

Advise, please, not judgments. Thanks.

reply to post by Druid42


"Don't give your kids enough to do nothing. Give them enough to do something."

There is a reason that smart rich folks have trust funds that raise the age far above 18. Do not let him buy that computer. If he wants one that expensive, he obviously knows enough to build his own.

Use what he needs for college tuition, but make him work to pay his rent. Yes, invest the rest. The market is shaky right now, so whatever you invest it in, WATCH it carefully.

My advice would to NOT invest in CDs as your money becomes locked in and fees are charged to get liquid. Really, $80,000 is not much money at all. Invest across the board right now if possible- don't put all your eggs in one basket. Check out PIMCO Total Return Bond Fund, FAMCO MLPs, Apple stock, or Permanent School Fund Bonds with maturities no further out than 2030. Just my suggestions though.

When my grandmother passed away, she left my siblings and I a little money. It wasn't much but we sat down as a family to discuss how our grandmother would have wanted us to use it (helped that we had the conversation before hand with her too). My siblings took a token sum and knowing how fiscally conservative our grandmother was - and how hard she worked in her life - we put the rest away, saving it for college educations or a house if they ever wanted a token towards the down payment.

My siblings blew through the money they kept within a few weeks. Cell phone, laptops, and things they have nothing to show for some years later. So in retrospect it was the right decision to put the majority away.

In similar spirit, another family member blew the inheritance they received on a car and she's now married with kids and struggling to find the money for a co-op. That car? A nice mustang that was junked because it cost to much to fix compared to its worth.

Also in similar spirit, a coworker of mine was telling us about how they inherited some money and are putting it towards a new house. A sibling who inherited an equal sum (never said how much) blew through it without anything to show for it.


So my advice -- if any -- is that like the lotto, many people who come into money will blow through it rather quickly and for foolish things. EXPLAIN this to your son, make sure he understands this.

Give him a bit of money to have fun with -- hell, tell him to take some of it and travel a bit, see the world. Live life because the memories will be priceless but the rest should be put away. Doesn't matter if its a CD, or semi-safe mutual funds or any combination there-of. Just something with potential to grow for later use where it will matter most.

reply to post by Druid42


With respect, the choice is indeed his, with, or without your say, or anyone else's.

I'd certainly advise investment in some sound solutions, and, recommend going halve-sies between you and the X-wife, out of pocket, not out of the fund, to pay for a financial adviser consultation which the son may listen to in full, in part, or not at all.

$80k can be a lot if worked well, but, $80k can disappear quicker than you can say "quick", all for nothing but girls and fun and a little bit of transient bling.

reply to post by satron


He's very interested in computer programming, with a slant towards game designing. He has a group of three buddies that are working on a flash-based game. Programmers make 80-120k a year, aye?

Originally posted by Druid42
reply to post by satron

 

He's very interested in computer programming, with a slant towards game designing. He has a group of three buddies that are working on a flash-based game. Programmers make 80-120k a year, aye?

if he is into programming then he needs to have a very good computer. im assuming it is a mac because they are usually what are used and are expensive

reply to post by fictitious


Will check into those. I don't even want to think about putting any money into the stock market, but to keep some of it locked up for a few years is one of my intentions.

Originally posted by PhoenixDown
Give him a bit of money to have fun with -- hell, tell him to take some of it and travel a bit, see the world. Live life because the memories will be priceless but the rest should be put away. Doesn't matter if its a CD, or semi-safe mutual funds or any combination there-of. Just something with potential to grow for later use where it will matter most.

edit on 11-4-2012 by PhoenixDown because: (no reason given)

Quoted for truth. Give the kid a little bit of it to spend on what he wants, and put the rest away somewhere safe.

Most people who inherit (or win) a bunch of money go and blow it on pointless crap.

Also I wouldn't be wary of the stock market, you just gotta know where to invest, now would probably be one of the best times to do so without having a time machine. If you do decide to take that route, I'd look into "contrarian investing". Basically you watch what the CEO's & other higher ups of major companies are doing with their stocks (they are required to report that to the SEC) and follow their lead, they are usually the best indicator of where the market is heading. My step-father made his living off doing that for the past 30-40 years, even wrote a book on it.

reply to post by Druscilla


$1000 in a 3 year CD at 2% APY = $20 per month in interest for 3 years, yielding $1720.00. Looking at all options to relay to him.

Originally posted by Asktheanimals
I wouldn't dare tell you how to invest your money but I did want to offer my congratulations on raising a great kid.
He took the adversity of that experience and put it towards his own dreams.
Best wishes on his College days!

Manhater has a point.
Maybe give him half and you invest the other half for him?

edit on 11-4-2012 by Asktheanimals because: (no reason given)

It's his money, his investments, and his returns. It's all in one account for now, to be diversified as he sees fit. Yes, he does get the laptop of his choosing as he'll need it for school. As a parent, we've discussed these things with him over the years, but the REALITY of it doesn't sink in until you check your balance online. Then, the spending itch sinks in.

ESPECIALLY at 18.

He seems well rounded. He seems smart.

He has been through more than you or your wife could imagine although your pain and suffering should not be diminished here.

I would say that he deserves the chance to either invest it, use it or blow it. Let him have at it!

But ask for a small loan first of course...

I know...I have no shame.

Peace

reply to post by Druid42

Looking with hindsight I doubt it would last me through 4 years of Uni but I would say let him have one big splurge, as long as it's one. A new top of the price-range laptop? Fine, as long as its not coupled to a 3 week vacation for 6 all expenses paid in oh..Jamaica or somewhere far flung and expensive.

It's good to be young but with little realisation of how such a sum of money is amassed by "labour" in the paid marketplace, it could turn into Monopoly soon with the wrong mindset. Not that I think a child of yours has the wrong mindset, I'm just being my usual pessimistic, down to earth self. I'll shut-up just about here I reckon...

Wow, I'm almost surprised at some of the answers here.....Just give him the money and let him blow it all away, without giving your 18 year old son any advice? Geez, really?

Originally posted by Druid42
Wow, I'm almost surprised at some of the answers here.....Just give him the money and let him blow it all away, without giving your 18 year old son any advice? Geez, really?

Well, you did ask for our thoughts...right?

Well...Ya got 'em!

Seems like you already know that we're wrong which means that you've made up your mind as to you having the correct answer already.

So my question to you would be...Why ask?

Peace