What could i hope for with,...

jillybeansisme answered 2 months ago …

Before you do anything with this money, you need to seriously assess where you stand on a few things.

How secure is your job? Do you have an emergency fund that will cover six months of basic living expenses (cable and eating out are not a basic living expenses, but the rent, the electric, gas, insurance, food, and water are!)? If you rent, are you living in a town/city that your plan to stay? If so, you might want to buy a residence immediately -- especially if you are a first time buyer because of the tax credit of UP TO $8,000 (have to buy before end of November).

While nobody likes to lose money, how would you feel if you did? In other words, what kind of risk are you comfortable with? This will help determine how you should invest. How old are you? This will help determine how long a time frame you have to recoup for any inevitable losses you might incur.

Personally, I would divide the money into thirds. I would keep one third for unexpected expenses that you only touch as a last resort after the emergency fund is used up and I would keep this money in an account that is very safe even though the return might only be a few percent per year.

I would put one third into medium term investments for future use that isn't necessarily retirement. This would be somewhat higher risk for higher returns.

The remaining would go into a retirement account. You didn't exactly explain your circumstances, so it is difficult to make suggestions. Do not let a broker have control of your account. Do learn about the various types of investments before you do too much more than set up your accounts. You can set up several accounts at the same firm, each with a different purpose. Remember, just because an account is for the long term, it doesn't have to hold an investment for forever. In today's environment you will probably not hold onto an invesment for decades--more likely you'll hold it for a few months to two years. Every time you buy or sell there is a fee paid and you must factor in those fees to the basis (cost) of your investment, but that's no reason to hold onto something that isn't working out!

You can learn about different kinds of investments in the "Want to Learn" section here on Tickerhound or at any brokerage firm at which you set up your accounts. Most firms will tout their own specialties.

You might want to consider Exchange Traded Funds so that your accounts can be more diversified with less money. They trade like individual stocks, but they are a group of stocks in a concentrated sector. You still have to investigate which ones would be best for you.

Hope this helps. Good luck!