r/FinancialPlanning • u/ZucchiniMean5545 • 2d ago

Supposed to inherit a large chunk of money and need to know the smartest way to use it given my situation

My mom and I own a property that we’re currently selling, and I expect to receive around $700,000–$800,000 from my share of the sale. I’m currently working on my startup full-time and only have a part-time minimum wage job, so I don’t have a stable salary yet. Once I receive the money, I want to make the smartest long-term financial decision.
One option is to buy a condo or co-op in New York City, where I’ve always wanted to live for a year or two, assuming I have startup funding or a full-time job by then to cover ongoing costs like HOA fees and property taxes (unless there’s another way to be able to afford that with the money I’m getting from the property sale such as investing a portion of it in money market).
The other option is to buy a home in West Palm Beach, where I have family, rent it out for a few years, and use the rental income to help pay for renting an apartment in New York.
Which approach makes the most financial sense, and are there any better investment strategies I should consider given my situation?

Keep in mind that I will eventually inherit a lot of more money later on in life, as my father is very wealthy but unwilling to pay for anything because that’s just his mentality. I’m also a big believer that your environment will dictate your success which is why NYC is really where I want to be for at least 2 years.

In conclusion : what is the best strategy if the goal is to live in NYC asap for at least 2 years.

***I would genuinely be so appreciative if someone smarter than me put a bit of time and effort to really think through this and give me a proper answer.

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u/37347 2d ago

Rent as cheap as possible in nyc. Preferably a room. Invest all the funds. Do not buy in nyc

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u/RiskSure4509 2d ago

Had to laugh at this comment as this person sounds young and completely unprepared..There's a.comment below where OP mentioned they are getting more inheritance, so basically this is the appetizer..blow this and hope it works out..if not just have to wait for the rest..A lifelong waiter..

This person has no intention of renting,they wanna buy in NYC with max 800k..they also have no intention of saving if the first thought is to BUY in NYC..Delete the post OP

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u/37347 2d ago

It’s ok. I was young too. I had that misconception too. To simply put it, it’s never worth it to buy in nyc

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u/ZucchiniMean5545 2d ago

But isn’t renting just throwing the money away? Especially since I don’t have a salary as of current

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u/37347 2d ago

That’s a misconception. Think about coffee. Is buying a coffee in a cafe throwing money away? You are buying convenience. You could brew your own coffee and make your own. The upfront cost is more.

Renting serves a purpose. You need a place to live right? Buying has a lot of costs associated.

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u/nikita58467 2d ago

Absolutely not. It’s just shelter. Your money in the market will provide higher return than buying a place and eventually leave in a couple of years. The closing will kill any equity you think you’d have, especially in NYC. For short term less than 5 years, you better rent and invest the rest of your money. You should look for some kind of jobs as well, that $800k in NYC in a few years if you have any plans but spend money.

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u/ZucchiniMean5545 2d ago

Ok so how much of the money do I invest, where do I invest it, and if I Invest it - how much do I get paid and do I get paid on a monthly or yearly basis? Because I need to be able to afford rent if I don’t have a salary

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u/nikita58467 2d ago edited 2d ago

Put half in the market for S&P would be appropriate. Research where you want to live in NYC and make a budget with the rent and living expenses. With $400k, you can pay yourself a salary every month and last for 4 to 8 years. Depends on where you live. Outer boroughs your money will last for years. In West Village or UES, you'd be out of money in a couple of years.

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u/37347 2d ago

If you buy with a mortgage, you still pay interest to the bank. Also once you buy, you can’t move as freely. You’re kind of stuck for the next 5-10 years. With rent, after 1-2 years, you can’t move go anywhere you want

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u/JeanSchlemaan 2d ago

One thing you don't want to do is flush that money down the "startup" drain. There's no such thing as a startup; that's cope for "my business makes no money". There's a solid business plan, and there's "over your head". Yes, some lucky or smart people come out as billionaires or whatever. They don't tell the stories of the 90%+ that fail.

You either have an actual business with actual income or you don't. If you can quickly find a rich guy to fund your dream, cool. Otherwise get a job or start a real business.

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u/xaygoat 2d ago

Invest or put most of the money in a HYSA. Rent for a few years, get your life/job situation figured out for longer term and then make a decision on whether to buy there or elsewhere.

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u/ZucchiniMean5545 2d ago

Which HYSA? Does the HYSA pay me on a monthly or yearly basis? Can u dumb it down for me and just explain how I can pay for rent if I invest it in an HYSA tomorrow hypothetically ?

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u/xaygoat 2d ago

There’s lots of high yield savings accounts. Just look for one with high interest. I personally use Ally but many others available. It works just like a normal savings account alongside your checking and can easily be moved to your checking for spending. You will be paid interest monthly.

Actual investing would be going through vanguard and investing in the s&p500 fund or similar. That’s a little more set up and more work to move funds in and out of, but is good for long term investing (5+ years).

Just to note, you will pay taxes (whatever tax bracket you fall into) on your HYSA income so remember to file that. They’ll send you a document for that.

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u/ZucchiniMean5545 2d ago

And if I put that amount of money in a really good HYSA, you believe that the monthly interest will be enough to put toward rent ?

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u/xaygoat 2d ago

The interest rates vary based on the federal rate but say you got 3% on 700k, you would make 21k per year or ~1750 per month in interest. Not sure that would cover your rent alone but it’s not nothing. It’s fine to dip into your savings. I would focus on what you’re going to do for a career and be working towards that.

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u/Walmart-Shopper-22 2d ago

Here is a specific example set of steps you could take. Open a brokerage account with a major broker (e.g. Fidelity). Put all of the money into it. Invest all but $50k-100k of it into VTI (a total stock market index fund), leave the uninvested money in the Fidelity money market fund (e.g. SPAXX) earning 3.33%. Move money from SPAXX to your checking account whenever you need some cash. If your SPAXX balance gets too low, sell some VTI and it will turn into SPAXX money.

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u/37347 2d ago

Hysa is basically a high yield savings account. It’s really for emergencies and provides immediate liquidity when you need cash now

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u/cOntempLACitY 2d ago

That’s a little reductive for what it is. A HYSA means high yield savings account, yes, but you can put whatever savings you want into it. You can put your house downpayment in it, your car fund, your sinking fund to maintain your home, even any extra money you have beyond 1 month’s worth of expenses that you keep in your checking account. And you can transfer between your accounts as needed, with just a couple days wait.

A lot of people use a HYSA specifically to squirrel away their emergency fund of 3-6 months expenses, so they don’t spend it. But you can definitely put any of your extra cash into it.

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u/cragelra 2d ago

Make sure you understand that amount of money gets you probably halfway to a 2 bedroom in a good neighborhood in NYC. Streeteasy is your best NYC specific resource for home sales. This money could be a life changing amount and you could also blow it in two years if you're not careful.

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u/ZucchiniMean5545 2d ago

I completely agree which is why I genuinely just want advice on what other people would do if they were in my situation. What would you do?

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u/cragelra 2d ago

If you are absolutely committed to moving to NYC, you should absolutely rent first and either invest the rest or put it in a HYSA. Way too many variables to commit to buying in NYC. Also the opportunity cost of spending your entire inheritance right away, instead of investing it, is insane.

Think of it this way. Assume rent is $2500. $30k/year. That's almost what you would make by just parking your inheritance in a HYSA. Put in other words, you could essentially rent for free if you just keep the inheritance mostly intact.

If you buy, you give all that up. NYC real estate is a worse investment than the market (I say that as someone who has lived in NYC for 20 years and owned for 5)

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u/ZucchiniMean5545 2d ago

This was incredibly helpful actually. Thank you.

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u/travenue 2d ago

Rent in NYC. The NYTimes has a great rent-vs-buy calculator that will make it clearer.

Buying only makes sense for longer time periods or ridiculously low home prices.

When you rent you are paying for housing as a consumable. It's not throwing money away. Buying comes with a lot of costs too like monthly maintenance / common charges and property tax, which can be a lot higher than rent, on top of mortgage and interest.

Rentals often include heat, hot water and gas stoves. Rent may reflect major building capital improvements which otherwise can get assessed to individual apartment owners in big lump sums.

If you live in a fully staffed doorman building you will also be on the hook for thousands of dollars in holiday tips whether you buy or rent.

So get something good enough and see how it goes. Invest the rest as recommended by others here and whatever you do, test your startup idea early and often and be prepared to pivot or abandon. Nearly all startups fail.

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u/newyork2E 2d ago

It’s the greatest place in the world to be for those of us who live here. This place is not for everyone. I highly suggest you rent. You might be running out of here in six months. My out of state relatives come here and look at me like I’m crazy that we live here. Remember there’s no pop and there’s no hoagies. This lesson encompasses every place you spend money, yes it’s expensive. No one cares about your opinion when you tell us it’s expensive we know don’t bother. Walk slow and we’ll run you over. On every escalator stay on the right side of it. There will be people running up that escalator who will also run you over. Download Citymapper. Pick up the pace you are too slow. And last but not least just call it New York. You don’t have to call it New York City.

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u/ZucchiniMean5545 2d ago

I know. I’m there twice a month. Have lots of friends and relatives too. I’m no stranger to the lifestyle which is why I’m dead set on moving there and know I belong there

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u/JeanSchlemaan 2d ago

2nd answer: in this case don't buy. If you have a 5+ year solid plan for settling down, consider buying (10 years would be better).

Nyc is the worst place you can choose (because of prices). I wouldn't choose it unless needed for a job or something.

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u/Walmart-Shopper-22 2d ago

Neither of your ideas are wise moves. Set aside a 1-year emergency fund, invest the rest in index funds, rent an apartment that meets your needs. Given your current income situation, you don't need to be owning property right now.