How to invest $150,000 (inheritance, bonds, brokerage, mutual funds)
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I have $150,000 I'd like to invest but have NO IDEA how to do it. Have never invested before and at this time, don't even know questions to ask a financial advisor.
Have you ever considered vintage pornography and overpriced self storage?
In all seriousness, how'd you come by the money? Inheritance? As alluded to by the previous poster, we need far more information on what your current situation is. Do you have stable employment? Kids that live with you? Alimony? Single?
Do you want to put roots down where you are currently living? Are you a homeowner? Do you have any debt? If so, approximately what interest rates? What type of debt?
I have $150,000 I'd like to invest but have NO IDEA how to do it. Have never invested before and at this time, don't even know questions to ask a financial advisor.
That's why you select a number of "pros" in the biz to interview.
They will each have different perspectives on the markets and your "best" options in various scenarios. They will all have different fee or compensation structures for their services.
Their job is to qualify your risk tolerance, your financial situation, your expectations & needs ...
and give you their options to choose from with an informed choice.
As a newbie investor, perhaps you might want to ask trusted friends for a financial adviser recommendation. If you don't have that resource, then visit with your banks' investment department/affiliate, or choose from the many brokerage houses that are vying for your business. Maybe your accountant has a recommendation, too. As well, there's been numerous approaches suggested in the C-D forums.
I can help you out, if I can find a post I put together for this often asked question I'll post it. But heading to a party.
Basically I think hiring an advisor, unless it's a one time fee, is a mistake as you will pay 1% forever as long as you remain in the investments that advisor put you in. Fee only guys charge thousands, I honestly think we can get you in the right place here.
Quick questions:
Age? Plan for this money and timeline for its use? Are you at all knowledgeable about the stock market and are you OK with the ups and downs it will give you, knowing that long term it's by far the best return?
Hopefully you have stuck it in an interest bearing account somewhere like a credit union that gives a decent return. Do not put it into a scheme from any relatives, friends, or strangers you meet. Do not loan anybody anything, especially good friends. You will lose both.
First you set financial goals for periods of time, short term, long term. Are you trying for college? For You? For kids? Boat? Airplane? Car? Elder care for when you can't take care of yourself?
Then you can determine your tolerance for risk. If you are young you can recover from most any fall in value and can risk more. If you are old you need more secure investments which will have a lower return rate.
Then keep reading about finances.
Even if young you need to set up a will, power of attorney, medical information permission, medical power of attorney, and Advance directive for final care.
For tips on the Stock market, I rely on a "group of fools" which could get me laughed off the forum, but they seem as good as anyone. If you do attempt the stock market, the online brokerage sites do okay, once you learn the jargon.
You could just buy what Warren Buffet buys; he seems to have done rather well.
Okay...more info to give an idea of who I am and what I'm hoping for. Retired couple 65 and 69 years old. No children and no debt. House and cars paid off and savings in the bank. Retirement is more than adequate and we have excellent insurance. We sold a vacation home and would like to now invest the money. We have no specific plans for the money...just would like to have funds should an emergency arise. We're in a tiny town with only a couple banks that could serve us.
SYes good call. First question: Do you have an adequate emergency stash of money? You referenced money in a bank accout, is it enough to cover a new roof? Buy your next car? If so I cringe at the word "bank" for this money because every bank in town will return less that 1%. With inflation historically at 3% and tax on this interest there is no better way to lose money than to put it in a passbook savings account at the bank. If the answer is no you do not have an adequate emergency savings well that's where you start. And yes the bank or an online money market account is the place. I have a money market account for our emergency stash at www.everbank.com because it pays higher than any bank. Only you can determine how much money that should be but keep in mind it will only gain 1% or so, a losing investment but you pay a price for safety.
Now for the rest. Even at your age you simply have to have some of this in stocks, the rest in bonds. Stocks have more ups and downs but over time they are by far the best return on your money and it isn't even close. Bonds are safer but still go up and down a bit, both will pay off long term way better than savings or money market accounts. Since you are fine with your pensions etc and won't need this money to put food on the table you can afford to ride out the ups and downs, just keep your eye on thebig picture and that is better long term returns. You are in your early 60's, you have years left to ride out the volitility, if you were older I may have different advice.
The easiest way to invest in stocks and bonds is with mutual funds. It allows you to purchase a lot of different stocks/bonds to spread out the risk. The simplest "Set it and Forget" it option could be Vanguard Wellington. This is a favorite here and possibly the most popular mutual fund in the world. Despite being nearly 65% stock/35% bonds it has lost money only 3 times in the last 15 years. https://advisors.vanguard.com/VGApp/...ce?fundId=0021. If you want to be safer it's sister fund Wellesly. https://advisors.vanguard.com/VGApp/...ce?fundId=0527. This fund has more bonds than stocks. Even though it shows more down years if you look at the numbers the down years lost much less, of course the tradeoff is the up years are lower too. Both of these funds are famous for their low fees.
These are just two suggestions, others will have different fund suggestions and they would be fine too provide they are low fee. The key is not necessarily picking the right fund, it's being smart enough to invest in stock/bond mutual funds in the first place. As a novice, and with the stock market at all time highs and on a 9 year run of really good returns (in other words poised for a few down years) it's natural to freak out if your money starts losing money. Don't be that guy. Understand the big picture, realize this is money you don't need in 6 months, have the courage to ride out the down times and you will be rewarded down the road with far better returns than the guy who played it safe and stashed it all in a bank account.
Last edited by DaveinMtAiry; 08-13-2017 at 06:38 AM..
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