Investing $100,000, where to start?

Question

Ok, here's the deal. I recently got handed 100,000 from a company I did some web based work for. I know in todays terms its not a whole lot of money, but it's more money than I have ever seen. If I were to stick it in a low risk investment, what is the monthly return I could see (ballpark obviously) and what type of investment would give me a monthly return after a given period of time.. I want to supplement my income with this but do not want to touch the principle (even have the principle grow a little).

Answer 1

I know what you should do. You should build a $50k or $60k portfolio of index funds, blending small-cap value, mid-cap, large-cap, and foreign. The problem is that you don't know what you should do.

A lot of people are going to try to rip you off. Don't listen to any financial planners, friends, etc. Don't invest in real estate. First, stick the money in a savings account that pays 5% or so. Then educate yourself about investing. A few weeks of reading and investigating will save you tens of thousands of dollars over your lifetime.

If you don't educate yourself, you have two choices: become dependent on a financial advisor who will bleed you dry, or become so scared you leave it in a savings account and you never make any money off it.

So read up on index funds, which are the lowest cost way to invest. Read Bogle's books, like his Common Sense investing. His company, Vanguard is a great company to use and its based upon solid academic foundations. Don't bother with stockpicking or trading - those are sucker games. CNN's Walter Updegrave has a book too. Investopedia has a lot of good articles. You don't need any expensive seminars or tapes or anything - that's all scams. You can learn everything you need to know about investing in maybe two or three $20 books, and that info will be worth at least $20,000 over the next five years, I guarantee you.

Good luck!

Answer 2

The simples investment would be short term bonds. If you live in the united states, you could buy municipal bonds - the interest you would earn is tax free. Right now most municipal bonds maturing inside 5 years yield about 3.50-3.60 percent. Does not seem like a lot but remember that is the equivalent of about a 5.38 percent return on a taxable investment (if you are in the 35% tax bracket) The payment would be semiannual, and at the end of the period (maturity) you would get back all your principal.
Munis have a very low default rate, and the majority of them are insured against default. They are extremely low risk.
When the bond matures, you can simply reinvest at whatever the prevailing market rate is at that time.
One word of warning. liquidity (ability to sell) is difficult, and if you are forced to sell early, you will get a below market price. so stick to 1-2 year maturities. At this point in time, investing for a longer period of time (longer maturity) does not gain you a noticeable increase in return.

Answer 3

How about you sink about 20-25 percent into the 100 biggest (by market capitalization) companies on the New York Stock Exchange: check out the stock symbol NY. It is an exchange traded fund with really low costs.

How about putting another 20-25 percent into the next biggest technological leap, nanotech? See PXN.

How about investing another 20-25 percent into companies that provide the materials of industry and construction? Check out MXI, the global materials sector index fund. If tomorrow's industries produce great things, these companies will provide a big chunk of the most critical materials that they need to do it.

How about putting a big chunk into some of the most stable dividend paying companies, the Dow Jones Dividend index: DVY?

Answer 4

to earn a return you've got to calculate many things, taxes and inflation -- then risk. Estimate taxes at about 25%, estimate infation at about 2% ... lets say you want to earn 10% on your money, take .10 x 1.25 x 1.02 or
desired return x taxes x inflation = 12.75% thats what you have to earn each year to make 10% on your money (the formula changes if you're investing in an IRA or a ROTH Ira, and dont forget risk - trading covered calls? much riskier than buying mutual funds). Then search finance.yahoo.com, type 'anabx' then 'get quotes' then 'profile' then 'View Top World Bond Funds' you'll see OIBAX earns about 14.5% each year over the last 5 years. THen find a trading company, etrade, scott trade, whoever and see if you can buy that fund - i'd recommend buying more than one fund and in different sectors with that much cash.

Best of Luck!

Answer 5

As a fellow investor, the best idea I can think of is:

Buy shares/stocks. Use your stocks to write/sell options. In other words, become a covered call options writer. You could also write bearish call option spreads. It's quick, easy money

This investment strategy won't touch your principal capital and you'll be able to earn passive income every month. This is actually a good time in the market to be a covered call option writer because the market is trending sideways and slightly bearish.

Answer 6

Well, I hear the dude with Hat Trick Beverage "hkbv" that pedals soft drinks from west to east coast out of the trunk of his car is looking for a person just like you. Good Luck!

Answer 7

I would start with a $20,000.00 investment in unleaded fuels. Since December 2006 I have made 62,000.00 off of a 20,000.00 investment.

Answer 8

Real Estate.