I am getting a $13,000 inheritance? How should I go about investing?

Question

I am thinking about using $3,000 to pay off debts and catch up on some bills, and anticipate having $10,000 left to invest.

I am 44 and I work part time. I have no experience with investing.

Answer 1

A couple of the folks got it here. Since you didn't anticipate on the money coming, opening a Roth IRA versus a traditional IRA will allow for tax-free income to accrue when you're age 65.

Sadly, if you were 6 years older, you would have been eligible for catch-up payments for your IRA and be able to contribute more.

When you invest into an IRA, find a safer fund (especially since the verge of a recession is coming) with a 4 or 5-star Morningstar rating.

With the remaining $6,000, create a nest-egg in case something happens to your job. A savings account will allow for little easy access to the money, so you don't cheat yourself.

Answer 2

You dont say how old you are or if you have reportable income (a paid salary with income).
If you work, get paid and have income, consider putting $4000 in a Roth IRA. Any local bank can help you with doing this. Fidelity is good becuase they have very low load mutual funds or exchange traded funds that you could then buy with this $4000. A Roth IRA will grow tax free for you to withdraw when you are 59 1/2. May seem like a long time, but compounding interest for 30 yrs could turn this $4k more than ten fold.
The balance of the money ($6000) you could invest in other low fee, no load funds at the same financial institute you get the roth. I read a few of the other postings and none of them mention a Roth IRA. Pay off the debt with the first $3000 like you suggested. Avoid paying any high interest loans. It will erase any gains you have on other investments.

Answer 3

If you pay U.S. taxes, the first thing to do is put as much of the funds in an IRA as you are eligable to do. You may have to put some in this year and some in over the next two years, because there is a limit on the annual contribution. A Roth IRA is likely to be a better deal than a regular IRA. Inside the IRA, buy an international index fund with low annual expenses and a low purchase cost (example: ETINX), and keep it until you retire. Be patient. Don't sell until you need the money. The total costs and fees should be under $50 if you do it right. You don't need anyone to advise you how to invest.

Answer 4

Be very careful using advice from strangers whose qualifications and motives can never be known.

Read a book or two on investing (or retirement investing). I know it doesn't sound like fun...... but it will be well worth it.

Consider mutual funds from Vanguard or T. Rowe Price.
I especially like the T. Rowe Price funds that target a retirement date.

You may want to consider $4000 for a ROTH IRA for 2007 and $4000 for a ROTH IRA for 2008. (if you're over 50, you can make that $5000 for each). This way you won't be taxed on growth/earnings ever (if qualified). Talk to the Mutual Fund company about this.

BTW: Mutual Funds are generally for investments of 10 years or more. Some may be OK for 5 years or more.

ALL THIS ASSUMES YOU HAVE AN EMERGENCY FUND ALREADY SET UP AND IT'S FUNDED!

Answer 5

First of al I am glad to hear that you are talking about investing. Honestly there are so many options, and it depends on your risk tolerance level and your age.

I personally think that you should atleast buy some S&P 500 Index funds, and a good company for mutual funds is Vanguard. The S&P 500 index contains 500 stocks so the risk of investing comes down. Over the long run, the S&P index has given good returns, over 10%.

Personally if I were you, I would put 5000 in index funds, put 2500 in a high yield savings account with HSBC (they pay around 5%) and the rest i would be brave and buy some stocks.

Answer 6

First, set up an emergency fund equal to 3 to up to 12 months of living expenses before you invest a dime. If you need to access funds for unforeseen reasons, you won't have to disturb you long-term investment. (most responses neglect this important step). Then before you invest, if you want to go it alone, use the web and/or library resources to determine what will be suitable for you (risk tolerance, time horizon, etc.). Ask others you know for referrals. If you want professional help, some on-line brokers will give you limited advice for very low cost. Just google "on-line stock brokers".

If you use a Investment professional you might pay more in fees than you need to because of the size of your initial investment.

If you use mutual funds, only select no-load funds, and make sure your on-line broker doesn't charge low-balance or no-activity fees.

A little bit of self-research will save you a lot of costs and make your investing experience more rewarding.

Good Luck!

Answer 7

Anticipate putting more than half the $10,000 remaining in credit union or bank for emergencies. Check out in your local library Forbes and Kiplinger's magazine for mutual funds. Know your risk tolerance. Mutual funds are long term, not buy one day sell 2 months later.

Answer 8

pay off high interest debt like credit cards is a great idea. Then put the rest in a CD or high interest bank account (5% is good). You'll be surprised how well you sleep at night with money in the bank to protect you against unknown emergencies. Congrats!

Answer 9

plz don't fo money market/cd- those are for small amount short term. Read Rich Dads Guide to Investing.

Answer 10

I would speak to a professional investment advisor. No one here can accurately answer you question with the information you have provided.