How should I invest a $ 500,000 inheritance?

Answer 1

You should invest 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 aggressively in stock funds, and part conservatively in money market funds and bond funds. Vanguard.com has an on-line questionnaire which will give you an idea how aggressive you want to be.

If your company offers a 401K plan at work, try to invest the most you can. The money grows tax free, and some companies will match your contribution. Investing in a mutual fund IRA is also a good idea.

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. Read the links below and form your own opinion

Buying a house instead of renting will save you a lot of money in the long run. You don't have to pay rent and you build equity in your house instead. Buying rental property can also be a good investment. However, being a landlord can be hard work, and many people are not good at it. If you don't know how to handle deadbeat renters, you can have trouble.

If you have high-interest debt, like credit cards, it is best to pay this off first before trying most of the investment ideas above.

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://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

If you have an inheritance of that size, I'd suggest getting a financial adviser. Nothing big, but someone who will sit down with you, 2-4 times a year, and review your goals and the performance on any investment you've had. Find a fixed-free adviser, not someone working on commissions for what they can sell you.

My suggestion (I'm NOT licensed) is that you (a) pay off any credit card bills, (b) pay off any other consumer debt (e.g., car loans). Then, and only then, should you invest the money.

At that point, max out your contributions to retirement accounts. If you have kids (or will), put some in a 529 plan.

What's left... Mutual funds or ETF is a nice way to buy into many stocks or an index. Look to split the money between 3 or 4 funds that complement each other (instead of duplicating). If you can afford to risk it all (and, given that it's an inheritance, you likely can), then look for aggressive growth funds (although don't go crazy and pick something ridiculously risky).

Answer 3

There's some really good advice above.

I would certainly erase most if not all your high interest debt. Investing in index funds is probably the best piece of advice a non-professional can receive....after all, nothing outperforms those indexes over time.

I would also set aside a percentage and blow it. Just buy stupid stuff that you want. Pick a number you can live with and go on a crazy shopping spree. Life's too short so enjoy some of this windfall.

Answer 4

You can invest a couple of gees in a wonderful single mom that is trying to get on her feet ; )!! Hint, hint!! No really congratulations an do invest wisely!

Answer 5

You should find a good attorney and also a good investment firm.My daughter inherated 150,000 and it is being invested and kept in cd's and investments until she turns 18.Just make sure you are not being ripped off

Answer 6

First ask yourself: What I really want to be?

A employee, a business owner or an investor?

Buy rich dad, poor dad I and II (cashflow cuadrant) by Robert Kyosaki, at about $16 both, they should help you answer the above question.

Answer 7

For highest returns, invest in yourself - get an education if you don't have one! Or develop skills you don't have and you will reap returns much more than the 500k you have!

Don't blow it away as many will advise you to.

Good luck!

Answer 8

Open a brokerage account at Bank of America and hire me as your Portfolio Manager.

Answer 9

dont invest, just party like a rock star!

Answer 10

learn how to invest in coins....