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Where to invest lump sum of money

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Money Talk > Investing, Stocks and Bonds

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jcp988
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Where to invest lump sum of money  Reply with quote  

My wife and I had a lose in the family last year. From that we are going to be receiving $35,000. We have plans from $15,000. We need a new AC/Furnace and we are going to add our emergency savings.

We are both 28 and work fulltime. We put about $850 a month into our 401ks. And we don't have any debt, minus our mortgage. We don't really "need" the money for anything immediate. My question is what can we do with the remaining $20k? I would hate to just let it sit in a savings account and earn .00005 interested or whatever pennies they offer. But I'm relatively new investing, I'd love to buy investment property but we aren't quite ready for that yet.

I'm looking for good investments for 5-10 years for 10k-20k with up to moderate risk. Any ideas?
Post Thu Feb 02, 2017 7:08 pm
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oldguy
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The best news in your post is the $850/m into the 401k's. That will be $2,250,000 in 30 years if you are using the 10% to 12%/yr market index. (We're retired, I was always surprised that less than 35% of my coworkers used 401k. Ours exceeded a million at retirement - and we retired early.)

As for how to place the $20k, here is a tip. The average lottery winner is broke in about 7 years. The average person does not understand the management of lump sums, they immediately start thinking of what can we do with it. Pay off cars, credit cards, mortgage, save for college - all wrongheaded.

I would invest the entire $35k in an 11%/yr index and not touch it - in 30 yrs it will be about $800,000. And pay for the new AC/furnace just as you would have w/o the inheritance.

The book - The Little Book of Common Sense Investing by John Bogel (the founder of Vanguard) explains the Index Concept very well. The book is about 7 yrs old - I enjoyed it because it's exactly what I did for 40 yrs. (about $15 on Amazon).

If you continually direct your income stream to its highest and best use, you don't have to make so many choices between "fun things" and 'wealth-building", You can do both. And there are few money arguments when you are on track to be millionaires - and you're free to spend everything beyond the $850/m (if you wanted to).

quote:
But I'm relatively new investing, I'd love to buy investment property but we aren't quite ready for that yet.


We held 4 rental houses over a 40 yr period, sold them after retirement. They made money, 3X to 8X capital appreciation. But the best return turned out to be house equity, ie, remove the equity, use it as seed money to invest large lump sums at 11%/yr.
Post Thu Feb 02, 2017 9:00 pm
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