Just received an out-of-court settlement for $250k,... what's the smartest investment I could make?

Question

I'm a 52 year old divorced mother of a teenager. Currently earning 30k/yr... I have $25,000 in my retirement acct., and about $8,000 set aside for my daughter's education. I don't like taking risks with my newfound money. So far, I put most of it in $10,000, 5 yr CD's earning 4.5% - no penalty for one withdraw. Any suggestions?

I'm pretty much debt free-- my very modest home is paid off and credit card debt is very low.

Answer 1

Interest rates are going to go up over the next 5 years, and with 250k you should be able to get a 5% one-year rate in a CD.

Don't let any one person know you have this much extra money. They will try to take it from you.

5 yrs is a long time to tie up money, ever. If you insist upon 5 yr CDs, then put 20% of the total into 5 different ones, and set them up so that they expire one per year. So, today, you'd get a 1-yr, 2-yr, ..., 5-yr CD. Renew the 1-yr as a 5-yr, then the 2-yr as a 5-yr. In 5 years, you'll be loaded up.

They say you should diversify. That still doesn't mean you need to go crazy here. You could buy a $35k plot of rural land, some tax-free muni bonds, and maybe some "safe stocks" like public utilities. A professional should help, but beware they may try to just get you to buy what they are selling for some kind of commission.

If your daughter is a teen, and college is coming, put all that money into CDs or (if you are sure she will finish what she starts) tuition credits. The rest of it should be put towards your retirement. At 52, you want to start decreasing your risk, so don't put it all in dot-bomb stocks. Talk to several professionals about your options. Don't let them push you to a hasty decision.

Also, revisit your investments every 3-4 months. If something is doing well, sell some of it off and buy something that is in the crapper. That sounds like a bad idea, but if you do it over time, you're always selling high and buying low, which is what you want to do!

Good luck! And congrats on the money.

Answer 2

I recently invested in something called a "Managed Separate Account". This basically means that you allow a registered investment advisor to make decision about where to invest your money. The one that I know of is not a financial planner as those guys do not have access to the greatest products/information. The organization has been in business since March 1999 and has returned over 18% per year every year since 1999. There may be better investments out there, but they are very hard to find. Their approach is conservative with a focus on value investing. The securities that I now own are mostly household names. This is a long term investment strategy, but the returns are rock solid. They can be found at www.mrm-horizon.com

Answer 3

Definitely do not buy land or real estate that you'd rent out. It is way too much hassle, and at this point in your life, it's too risky to get into now. CD's and other safe investments (bond funds) are the way to go. Do some research and find the highest yielding savings accounts or money markets. Protect your cash! Also, there are about a hundred ways for your daughter to pay for college, so don't sacrifice a large chunk of your nest egg to send her to college. It sounds cold, I know, but you deserve to live as comfortably as possible. Your daughter will be fine.

Answer 4

Unified Theory of Everything Financial
Revealed in Dilbert and the Way of the Weasels
By Scott Adams

1.Make a will
2.Pay off your credit cards
3.Get term life insurance if you have a family to support
4.Fund your 401k to the maximum
5.Fund your IRA to the maximum
6.Buy a house if you want to live in a house and can afford it
7.Put six months worth of expenses in a money-market account
8.Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any discount broker and never touch it until retirement
9.If any of this confuses you, or you have something special going on (retirement, college planning, tax issues), hire a fee-based financial planner, not one who charges a percentage of your portfolio

Check the bottom line: A portfolio with an asset allocation of 70% in Vanguard's Total Stock Market Index (VTSMX) is doing just fine, performing remarkably close to the S&P 500 index. Moreover, that simple two-fund portfolio is perfect for the vast majority of America's 95 million investors who are passive much as Adam's Dilbert character.

The truth is, most investors have little or no interest in Wall Street's casino action; all the time-consuming research, the sophisticated stock-picking tricks, the costly trading necessary to play in a market drowning in 10,000 stocks, 18,000 funds and more than 100,000 bonds. Most investors have jobs and kids as their top priority. Moreover, Dilbert's simple two-fund portfolio compares favorably with our other lazy portfolios.

Answer 5

Any suggestion could would desire to extra healthy along with your averall condition and your risk tolerance.$80,000 is a lifelike sum of money and that i could initiate by potential of going to an investment adviser to get an assessment of your financial difficulty and an investment coverage assertion. The consultant would desire to be self reliant and would value a nominal fee for the assessment. listed under are another techniques Do you very own your individual homestead? if confident, then what's your individual loan stability and your activity value? in case you do no longer very own a house, then that would desire to be severe up on your record of judgements. in case you very own a house and you do have a private loan, the question then is whether or no longer to pay down the debt or to locate an investment which will return a cost this is greater than the value which you're paying on your individual loan stability. inventory often have back approximately 9.5-11% in line with annum over a protracted quantity of time.( this could be a mathematical uncomplicated meaning that shares have lost money for some years and made extra money in others). in case you're own loan value is 6.5% then the return on making an investment in shares is 11.5%-6.5%=5%. subsequently it might make some experience to pay down a private loan even in part. desire this permits boudames

Answer 6

I'm like you, I'm not a risk taker either. But $8000 is not nearly enough for your daughter's education, so put about $30,000 more in her education fund. The interest will accrue and that will build her a nice college fund (haven't you checked into the cost of education lately? You'll faint). Putting it in ladder cd's is a good idea, that way one will roll over every year. Put more in your retirement account too. And set aside a little for some fun, like a good trip or something. Enjoy it.

Answer 7

First, find yourself a reputable investment firm - not your neighbor's golfing buddy or your sister-in-law's cousins boyfriend. Talk to them about mutual funds - our company's 401k adviser has us in them and they are doing great. Because the money is spread out over several funds (both stock and bond) the risk is less. CD's are OK, but they don't earn all that much. Sounds like you have good sense so I think you'll do fine.

Answer 8

I bet you would get better than 4.5% in a regular savings account or bonds.

Pay off all high interest debt and as much principal on your mortgage if you have one.

IIf you have any notes at a rate higher than 4.5% than you are just losing money

Answer 9

Good question. I would look for professional help. The fee you'll get charged for this advice will pay off. You need to find a financial advisor. Word of mouth referrals are the best. Ask you friends and family if they work with someone they would recommend.

Answer 10

we need some of that money for raising awareness for Afro-Caribbean organ transplantation just 10% of the money will g a long way, and your investment will be the love and happiness that will have been generated from the venture

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