Inheriting Wealth: Home Purchase vs. Investment Decisions

Kevin must carefully plan his financial future to avoid squandering his inheritance and create a life he truly desires.

### Navigating a $750k Windfall: Home Purchase vs. Investment Decisions
* 💰  Kevin, at 28 years old, is about to inherit **$750,000** and is contemplating whether to **buy a home in cash** or **invest the money instead**.
* 🏡  Before deciding on home ownership, it's crucial to assess whether he plans to **stay in the location for the next five to seven years**, as this can impact the decision significantly.
* 📊  He currently has a **fully funded emergency fund** and **$35,000 in his Roth**, placing him between steps **five and six** of financial preparedness.
* 😨  It's important for Kevin to recognize the weight of this decision, as he should feel a **sense of urgency and responsibility** to **manage this windfall wisely**.
* 🔍  The societal pressure to buy a home shouldn't dictate his choices; instead, he should evaluate what will **truly lead to a fulfilling life for him**.
* 📈  This could be the year he **fully funds his 401k** or considers **starting a business**, emphasizing that finance is personal and should be **tailored to his unique situation**.
* ⚠️  Kevin must create a thoughtful plan rather than follow generic advice, ensuring he **honors the legacy of this inheritance** and avoids the common pitfalls that lead to **financial loss**.
* 📉  Statistics show that **70% of second-generation wealth is squandered**, highlighting the importance of **making informed decisions to secure his financial future**.

[Music] All right, Kevin's question is up next. He says, I'm 28 years old, and I'm inheriting $750k in 3 months. Wow! Should I buy a home in cash or just invest? I currently have $35k in my WTH and a fully funded emergency fund. Thanks. And then I also saw that he put later in the chat, He lives in California and he's renting right now. So obviously, real estate is a big conversation piece in a lot of the areas of California. So yeah, what do you think? So Kevin, you're obviously in a very unique situation that you're about to have a large windfall of assets come your way at a very young age. $750,000 is a lot of money. And so the question of, Okay, well, should I buy a house in cash or should I invest? It's difficult to answer that specifically for you in your unique situation. But here's what we can tell you: when you buy a house before you decide how you're

even going to pay for the house, whether you're going to pay for cash or whether you're going to finance it. One of the things you should do is you should go to moneyguy.com and check out our home buying checklist. So, before you make this decision, you want to answer these questions, okay? Am I going to be in this location? Do I feel confident I'll be in this house for the next five to seven years? If the answer to that question is no, then you might not even need to be entertaining home ownership, whether you could pay cash or not. Then you want to make sure, okay, do I have an appropriate down payment? Check. And then if I do finance, will I be able to afford the monthly mortgage payment? Would that be less than 25% of my gross income? So, the first step you ought to do is say, okay, does home ownership make sense for me right now before you figure out how you're going to pay for it? Well, then the second thing I think Kevin ought to do is assess, okay, well, where am

I right now, and this is what we know. It sounds like he's pretty squarely in somewhere between step five and step six. He's got his fully funded emergency fund in step four. He's got $35,000 in a Roth. What should he be thinking about, or maybe in your experience, BR, when you've had other young folks come into large windfalls? What are some of the guidance we give them into how to handle that? Well, first, Kevin, I hope you're scared. Are you scared? If you're not, that's a problem because this is your mom's spaghetti moment where you can't blow it. I mean, it's serious. I mean, this is nobody gets these types of opportunities, and if you're not thinking about how heavy this decision is, I think you're missing something because it is, and I'm so sorry for your loss that's created this, but it is one of those things where I need to think. You need to take and elevate this to the point that you say, I cannot screw this up because

this is a head start. This is an opportunity, and I think a lot of people will immediately. It's interesting you say, Should I go buy a house? I think a lot of stuff is societally put upon us to say, This is what successful people do. This is the next thing you need to do. Be careful with that. I want you to seriously self-assess, and I love that we have the financial order of operations, even Millionaire Next Millionaire Mission. I'm about to call it Millionaire Next Millionaire Mission, um, to kind of, if you need to really frontend load your knowledge, to figure out what is actually your best life. What do you see? This is the type of money coming your way that you can go ahead and start visualizing what you want this life to be. And I know that's hard for somebody who's 28 years of age, because I, for myself, I thought I was retiring at 50. I had all these assumptions in my brain about what my life was going to look like when I was

in my 20s, and it's turned out completely different. But that doesn't mean that you can't make big key decisions right now at age 28 that will set you up. But that's why you've got to figure out. Maybe it's a house, but maybe it's also. This is going to be the year you're going to fully fund your 401k at work. This is going to be the year that you put aside maybe a little bit extra in the cash reserves because you know you've got a business opportunity or a business venture you always thought you wanted to start for yourself. And you've done all the right things to prepare for that. I don't know what your answer is, but I'm just saying you need to take the weight of this big, big opportunity and don't blow it. And that's what. Don't just fall into what everybody tells you you should do because I see this with all big life events. I've shared the story with somebody who was in my Sunday school.

class where when her husband prematurely passed away in their 40s. Every every like go pay off the house. That's what you got to do. You got to go pay off the house. And she came up to me and she's like once she found out what I did for a living. She's like please tell your people. Make sure that that really is the right decision. Because everybody was quick to tell me to go pay off the house. And then I didn't have money to pay for you know two growing boys who are playing sports and still in school and everything else. And that's why I say and and look for a lot of people. Maybe paying off the house was the right decision. If you're a brand new widow or something like that. But you got to do the work. Everybody Finance is personal. You got to triage your personal situation. That's what we tried to create with the financial water of operations. So you can kind of figure out what is the life well-lived for me. And take it serious enough to actually make that a

plan. Don't just do what everybody tells you to do. Actually create a plan that's for you and the life you want to live. And then don't blow it. Do not screw this up by going and like even I said, if you want to start a business venture, make sure you got a really good chance. You did the 3D glasses, you did the, you know, dream plan, down toe plan, the doooo plan. Because this is one of those things, it's a big fork in the road moment. And I just want you to come out on the other side and be able to celebrate the legacy of what somebody has paid it forward to you versus you squandering it and losing it because like so many people do that. Y'all heard me give the stat that 80% of millionaires are first generation. The only way that stat works is if 70% of second generation blow it, 90% of the third generation, it's gone. I don't want that to happen to you, Kevin.

I'm Inheriting $750,000 In 3 Months! (Buy A House Or Invest?)

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The Money Guy Show

Inheriting $750k: Should I Buy a Home or Invest?

Kevin, 28, is inheriting $750k in three months and is unsure whether to buy a home in cash or invest.

It's important for him to assess his long-term plans in the location and determine if homeownership makes sense before deciding on payment methods.

The Money Guy's home buying checklist can help him answer crucial questions about his readiness for homeownership.

Navigating a Windfall: Guidance for Young Adults

A young adult with a recent windfall is in a critical decision-making phase, having a fully funded emergency fund and $35,000 in a Roth.

It's essential to take the opportunity seriously and avoid societal pressures to make immediate big purchases, like a house.

Self-assessment and visualizing one's ideal life are crucial for making informed decisions about how to use the newfound money.

Making important decisions at 28 can set you up for the future, whether it's buying a house or fully funding your 401k.

It's crucial to prioritize personal financial goals and not just follow others' advice.

Every financial situation is unique, and it's important to triage your own circumstances to determine the best path forward.

It's important to create a personal plan for the life you want to live, rather than just following what others say.

Make sure your business venture has a good chance of success and approach it with a solid strategy.

Be mindful of the legacy you're building, as many people squander opportunities, leading to a cycle of lost wealth in future generations.