I’m due to inherit $400,000 worth of Abbott Laboratories stock from my deceased father died Feb 15th 2007?
I need to pay off some debt $35,000- student loans, $17,000.- credit card debt,and $11,000.- car loan.I thought with part of the remaining stock I would use $100,000. to put down on a $250,000. condo.and invest the rest…however,some where I read that it may be better to put off buying the condo and reinvest the stock in European companies…i.e. Allianz..Bayer..I only pay $ 675./month for rent…2 bedroom 1100 square foot apt. Any advice???
In other words.DO NOT BUY THE CONDO.Continue to rent at 675/month and wait.The condo market in Downtown Columbus Ohio is not doing well.They built alot and they are not all selling.
Regarding the first answer, I don’t think you’ll have to pay much to the IRS and your state. When you inherit property (like stock), your basis is “stepped up” to the fair market value of the property on the date of death, so you should only have to pay capital gains tax on any gains since Feb 15, which shouldn’t be much. An inheritance is not taxable income to the recipient.
I agree with the answer that says pay off the debts first. In my opinion, any debt other than a mortgage is bad and should be eliminated as soon as possible.
As for the condo, I guess it depends on where you live. I personally would prefer a house rather than a condo since in most parts of the country I think condos can be more difficult to sell later on. But if you’re in New York City or somewhere that condos are one of the primary types of housing, then a condo might not be a problem. Real estate’s in a bit of a slowdown right now in many areas, so it’s probably not a bad time to buy. A little later might be better, but if you wait too long, the prices will start rising again.
As for the European stocks, I think it’s good to have some percentage of your money investing in international stocks, but I wouldn’t put it all there. Abbott itself is a decent company, so you might want to leave some there. Beyond that, if you don’t know a lot about stocks or how to value companies, you might want to buy mutual funds that track a major stock index (e.g. S&P 500, Russell 2000). That gets you diversification across a large number of companies in many industries and eliminates the risk that the one or two companies that you choose to invest in turn out to be poor performers.
I do NOT agree with the answer that says to pay off the house/condo before putting anything in stocks. Mortgage rates are low now, so you can probably get one for 6% or less. Over long periods of time, the stock market has historically returned more than that. I think if you can borrow money for 6% and invest it in something that has average returns of 8%-10%, that’s a good deal. Yes, stocks are volatile, but if you don’t need the money for several years, I think they’re the best place to invest.
