Using a throwaway account, I've been on HN for a loooong time.
The first time I came into some unexpected wealth (from selling stock options) I put it aside to pay for my kids college. In terms of frames of reference, I recognized that "lack of debt" is a big help for new graduates even back then. I had gone through school on a combination of scholarships, grants, and student loans but it cost less back then and when my wife and I got married she had actually saved enough to pay of my remaining student debt (which was < $10K as I recall).
Because we didn't have debt, both working as engineers without kids let us save enough and have a good enough debt/income ratio to buy a house in California. And that was what allowed us to stay in California when she wanted to stay home and raise the kids. So looking back, it was a good call.
An exercise that I often gave my kids and engineers I've mentored is to "project your expenses forward" to get an understanding of your "burn rate" over time, then invest / save to ensure you're above the power curve (not incurring debt to pay a projected cost). Three areas I look at are < 1yr, < 5yrs, and > 5yrs. For the latter I put stuff in equities mostly, for < 5yrs it is a mix of equities and fixed income notes (bonds, CDs, etc) and < 1yr usually CD's. For example estimated tax payments (income and property) in CD's that are 3 month, 6 month, and 9 month maturities, depending on when the money will be required.
My parents put $100K of an inheritance my Dad got into a managed "growth" account, and each year if it had grown > $10K they would take out 10K for a vacation that year. That worked well for them being on fixed incomes.
Another friend of mine invested about $500K in a property in the Sacremento area and rents it out which gives them a steady income. It is more work however.
Personally I prefer to avoid index funds because I don't know how the general market will go, but I did know how some specific companies would go. But I felt much more clarity about that last year. I don't want my returns to hinge on Federal Reserve policy, so each position I hold right now, IMO, is something that will do well regardless of Fed decision-making.
The point of this is maybe you're intending to retire in 5 years. If that were the case, I wouldn't suggest dumping into the S&P500 necessarily.
Another is: what other assets do you have? Do you own your own home? What do you have in retirement savings? What other assets?
If you have children, live in the US and intend to for the foreseeable future, you may want to divert some funds into Roth IRAs for your children. This could be instead of or in addition to 529 savings plans.
If you come from somewhere else and intend to return to taht country then buying property in that country might make sense.
I would generally say own the house you live in. I don't mean outright. If you have a low interest rate locked in for 30 years there's zero point in repaying it early.
The default option would be to dump it in VTSAX but so much depends on individual circumstances and goals.
- Make sure you have enough saved for taxes and hire a good accountant to help you optimize taxes. Lot's of options here, start a LLC, open a SEP retirement account, backdoor ROTH, etc.
- Max out a high yield savings ($250k) into something like Goldman Sachs Marcus (currently earns 3.3% risk free). Here is my referral promo if interested, we each get a interest rate boost https://www.marcus.com/share/JUS-TMY-6QYS
- Split up the remaining into investments. This is your choice, but I'd recommend the majority be an index fund ($SPY) or if you like tech and willing to accept higher risk ($QQQ). The rest you can speculate on individual stocks or cryptocurrencies.
One unexpected benefit is if you have >$500k invested, it opens up some additional services that I had no idea 'rich' people had available. For example - I can borrow against my investments anytime at the libor rate w/out cashing them out. It's not <1% anymore, but still super attractive should you need some of the money in the future.
I also took this opportunity to fully fund 529s. I think it was easier to write off that money the day I got it than mentally earmark it.
If you have kids, you can put it in Utah's 529, and save on taxes when you need it for college.
> The Fund employs an indexing investment approach designed to track the performance of the S&P 500 Index, a widely recognized benchmark of U.S. stock market performance that is dominated by the stocks of large U.S. companies.
Another option, while not passive: buying property and long term renting it. You should aim to have it pay back the initial investment and provide passive income in retirement. Easier said than done but entirely possible
Then, I'll sail it around the world, and you can come and visit whenever I reach a resort location!!
Image a couple weeks a year in Fiji, Easter Island, Mata Nue!
Open an IRA, and get as much as you can into the IRA.
It’ll generate a couple thousand a month. It’s low risk, generates income, easily transferable to heirs.
I would personally recommend 50% $VTI, 20% $VXUS, 30% $BND. bogleheads.org for the reasoning why.
Flatly ignore anyone recommending 3x leverage HFEA gambling addict nonsense. Listening to them, your portfolio would be down 62% to $260k this year, worse than 09 great recession.
Get a Vanguard advisor.
Pay your taxes.
REITs or maybe go for a income generating rental property or two.
Oh also make sure you pay your taxes.
10% to charity, attend maybe another 10% if you feel like it, save the remainder.
For saving, make sure you have a good emergency fund of 4-6 months of expenses. Then start paying off debts, ending with your mortgage. Whatever you have left, put into a balanced set of mutual funds that have risk according to you tolerance for it. Pretty standard Dave Ramsey advice.
2H 2023: Vanguard high dividend etf (value stocks)
And you’re asking random users for investment advice?