I recently inherited $250,000. What is the best way to invest it??

Answer 1

First, I would pay off all high interest debt. Pay off everything you can except the house mortgage and student loans. Paying off debt is one of the best investments you can make. You will have more money in the future because you won't have credit card bills to pay. (Depending on the rates, you may want to pay off the mortgage and student loans as well.)

Second, start investing in stocks, bonds, and money market funds. You want to buy a diversified portfolio of stocks, as individual stocks are too risky. For most folks this means buying mutual funds. I like Vanguard.com, other people like Fidelity, TIAA-CREF, and DFA. Buy no-load, low cost funds. If you are like most people you will invest part of your money conservatively, in money market funds and bond funds, and part aggressively in stock funds. Vanguard.com has an on-line questionnaire which will give you an idea how aggressive you want to be.

I like index funds. Because of their broad diversification, you are less likely to have a dramatic drop in value. They also have the lowest expenses. For stock funds, I would suggest putting ~70-80% of your money in the Vanguard Total Stock Market Index Fund. and ~20-30% in a foreign stock index fund. However, there are many different opinions out there on what the best mutual funds are.

Investing in a mutual fund IRA for retirement may give you an income tax break. Talk to your tax adviser. You may also be able to invest in a mutual fund via a 401K plan at work. Many companies will match your 401K contribution. If so, this is probably your best investment. Buying a house instead of renting will make you a lot of money in the long run.

Believing advice you get on Yahoo answers can be risky, so read these websites for further information. If you find it too confusing, contact a professional financial advisor. They will charge you significant commissions, however.

Sources:

http://www.vanguard.com/VGApp/hnw/planningeducation
http://finance.yahoo.com/funds
http://www.dallasnews.com/sharedcontent/dws/bus/scottburns/columns/2007/vitindex.html
http://www.fool.com/school.htm
http://sec.gov/investor/pubs/assetallocation.htm
https://flagship.vanguard.com/VGApp/hnw/FundsInvQuestionnaire?cbdInitTransUrl=https%3A//flagship.vanguard.com/VGApp/hnw/planningeducation/education

Answer 2

(1) Best way to increase income for STARTERS is eliminate debt. The less you have to pay the more free income (cash flow) you have. (2) Incorporate your video company for tax breaks and liability protection (in case the baskets you're teaching people to make start killing people). (3) Tax-free municipal bonds purchased in the state you live in (assuming you have a state income tax) might be a good bet for part of your portfolio in terms of income. You also want a diversified stock portfolio, perhaps a little exposure to commodities or real estate as well. (4) Consult an estate planning attorney. Assuming you don't blow all of the money on this stupid (uh, I mean... WELL THOUGHT OUT) business, that money may grow and estate and income tax inssues will become more problematic. Good planning can help reduce that cost, help reduce administrative costs and avoid having your future heirs blow the rest of what you've got.

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Answer 3

Steven,

Much of the advice you have received here is simply wrong. For example, It is unlikely that you owe cap gains tax on inheritance since there is a step up in tax basis for assets transferred at death. Before giving advice there is a lot more that needs to be known about the situation.

Like, what are you trying to accomplish with the money? When do you need it? What are your current finances? What is your investment experience? What country/state do you live in? What are your current taxes wihtout the inheritance?

Only after these have been discussed can wise counsel be given.

Dana B
CFPr Certified Financial Planner, ChFC Chartered Financial Consultant, MSFS Master of Science in Financial Services.

Answer 4

If you are not a home owner yet, you might want to consider to get a roof over your head with the money.

If you already have a fully pay home (no mortage left), you might want to think about split up the money into different investments, long term, short term, CD, stocks or mutural funds etc. Find a reputable finance advisor to help you.

Spoil yourself a little portion (saying 10% of it) for some immediate pleasure - such as buying a new car, going for a trip, get a new computer etc.

But be wise with the money!

Answer 5

OK, does 300% return in 15 months excite you? I am talking from my personal experience here. I have started with USD12K in 30.8.2006 and from that time, they never miss to provide me with the monthly return as promised. They used the scale of 10%x3months + 15%x3months + 20%x3months + 25%x3months + 30%x3months.

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See for yourself and experience this exciting investement. Mind you, this is not a HYIP but real investment in offshore financial market.

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Answer 6

Wow, that's a nice amount! Much of your decision depends on your age, your current debt and your risk tolerance. First, pay off any high interest debt that you have. There's no financial benefit to owing a credit card company money. After that, you should probably start reading up on the type of investment vehicles that are available to you. If you don't have some idea what a financial planner is talking about, it's kind of hard to know if the plan is a good one for you.

That said, I would definitely consult with a few certified financial planners (CFP). The investment consultants with those three letters after their names have passed a national certification exam that gives them more knowledge than just a stockbroker at a big brokerage house. By all means, consult more than one. This is a person who you have to be able to feel comfortable with, much like choosing a doctor. Also, check the certified financial planners website at www.cfp-board.org. That should give you some ideas as to what you should be looking for in a financial planner.

Answer 7

I would answer the question differently for different people. For example, the best choices for a 20-year old making minimum wage should be different fron the best choices for a 60-year old making a six-figure salary.

Paying off any high-interest debt you have first is a good choice, regardless of who you are.

Getting some advice about handling taxes is also a good choice. I don't believe you need to pay capital gains taxes on the inheritence, but I am not a tax expert.

I also agree that you want to spend some enjoying yourself, such as buying a new car or taking a vacation.

Another priority I would suggest is making sure that you have about three-months salary worth of it in something that you can get to quickly without a significant penalty. Treat this as an "emergency fund" in case you are laid off, your car is stolen, etc.

Don't be in a rush to invest it all until you understand the implications of different investment types. If you have little of no experience investing, it is probably worth the time and money to spend a few hours with a certified financial planner. In general, the younger you are the higher percentage that should be put in the stock market, either directly or through mutual/index funds. The older you are, the more should be put into less volatile investments, such as bonds and certificates of deposit.

Answer 8

Invest it into hard money... u will receive between 10-14% on ur money due in 1-5 yrs... depending on how long u wnat it out there. 250k times % divided by 12 (months) that is your payment per month. Now tell me which stocks, bonds, tresure notes or anythign is that perfect... Do not use it to invest in real estate becasue you can leverge ur self to do that at 100% -90% with little down.. and that way u have money coming in from your hard money note.... if you put the 250k all into real esate u have not payments or little paymetns but u also do not have cash coming in to give u extra spending $$$.. and with a 100%-90% loan it is a tax write off. contact me and i can give much more details about the system.

Answer 9

Try this answer..go to The Mutual Fund Store website. MFS invests your money in mutual funds via Schwab..they charge a fee but they move the money at no cost to you. Mutual funds vary in their returns year to year so they need to be watched almost like individual stocks. Even the biggest strongest companies can be sued for millions or injunctions by the govt , no one company is exempt. MFS knows what they are doing and they are very legit. Beware of people who advise and are paid on commisssion.

Answer 10

The best way is to diversify between real estate, equities and I would even look at the foreign currency exchange market (Forex). With $2 trillion dollars a day being traded in the market it is the most liquid and the most active market on earth.

That was the good part...the bad part is that because there is the potential to make very attractive profits there is also an imbedded element of risk. Those that look at Forex as "the next step after online poker" are doomed. Most traders that enter the Forex arena lose because they have not taken the time to learn how to properly enter and exit the market so as to minimize risk and maximize profits.

I would suggest you at least look into it as a part of your overall investment strategy. The returns can be quite attractive (10%+ per month) and there are conservative strategies that reduce your risk of losses.

I would be happy to send you a report that a good friend of mine wrote that does a good job explaining the Forex market and some interesting ways to participate.

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Answer 11

I suggest you invest in real estate. To achieve excellent returns on your investments it is important to adopt the right investing strategies. To Learn more about investing in real estate check the website link below.

http://www.smart-investments.org