I am 23 years old and I was given $25K, what is the best way to invest this money?

Question

Hello Everyone!

Long story short: I am a 23 year old young lady that was given $25K from a lawsuit. I graduated from college less than 2 years ago with a degree in Finance, so I'm not LOST when it comes to investing, etc... but I would LOVE some opinions.

My current standing:
**My 2001 car is paid off and in good shape. I have 2 credit cards, all with high spending limits but very low balances. I had a loan, but just paid that off. My credit score is over 720 currently, but want it to be over 770 by the end of the year (not sure if thats relevant; but its a MAJOR goal of mine).

What I plan to do:
**I already used about 4K to pay off all of my loans, and pay 6 months worth of car insurance (which is very expensive; I live in NY)
**Invest 5K in a Roth IRA -- on EFTs
**Put 5K in a savings account (I'm looking @ one with a 5% return)
--- This leaves me with 10K... any suggestions? Any changes to what I'm thinking of so far??

THANKS IN ADVANCE!!

Answer 1

easy, you dont make any drastic moves, go to the bank or a financial counselar you put some in cds or bonds . You already used 4k so youre down to about 20-21k . If you want you can put a small down payment on a house but if youre not interested in buying a home yet i say just put the rest away. Dont spend it. Your plan sounds good the way it is

Answer 2

First thing I would do is open an online account with Fidelity or other good brokerage house. Mail them the $5K for deposit into your account. You will earn money market rates while it is in there. I would then buy a 1 year CD where you should be able to get a 5% rate. That will give you a whole year to learn more about what to do with your money and in that year, you will discover that things change so hasty decisions are usually not good ones. Some will recommend a Roth IRA, but I believe you want to get into common stocks as a buy and hold strategy. You have a long life ahead of you. Starting now to learn the ways of investing and saving will make you wealthy. A 5% firm return in hand is always better than a possible 10% return that goes south. Reach carefully to start with.

Answer 3

I would pay off any remaining debt and cancel the credit cards. Next, put 3 to 6 months of expenses in a money market fund for emergencies. Some portion would be for 'fun'. Define that however you like. If there is anything left, I see a down payment on a house.

Edit: I just noticed you have $10K left. I don't see the down payment on a house anymore.

Answer 4

Well, you can put $4000 in a ROTH, not $5000. After that, put the rest in a Vanguard Money Market account. From there, investigate fund offerings that Vanguard has and if you find something you like, you can easily transfer it into one you like. The MM account pays over 5%. You could also open a checking account at EverBank that was paying a 3 month introductory rate of 6%. Oh yeah, set your Roth up with Vanguard as well. I would suggest one of their target retirement funds for your ROTH.

Answer 5

You didn't indicate if you rent or own a dwelling. I'd suggest exploring ownership in a property but keep a bit of cash on the side for the unforseen issues that WILL crop up...

Overall, you seem to be doing great. Keep some debt and pay it over time if you want to get that score to 770 or better.

Answer 6

Buy Real Estate, Buy Real Estate, Buy Real Estate...

Answer 7

I dunno about you, but if it were me, I'd buy a house. 10K is a good start on a down payment.