My first post, please be gentle. 36 years old. Sold my delivery business last month and have $600,000 I need to invest. I have two mortgages, a second home that I owe 200,000 on at 6% set to adjust in 5 years and my primary residence that I owe 250,000 at 6% for 30yrs. No car payments and no credit card balance. My father owns a good sized manufacturing company and I'm basically guaranteed a solid inheritance of 3-4million at my father's passing within 15 years. Yeah, i know its pretty fortunate. I am married with twin 3 year olds. All costs of school are provided for by grandfather including college. Again, very fortunate. I have 1million in term life insurance and only $15,000 in cash (other than the pending money). Have new job where I rolled over $40,000 in 401k (putting in 9%, matched @ 50% up to 6%).

My question, what do I do with new found cash? Pay off home(s)? Invest in blue-chip stocks? Buy a boat? just kidding about the last one... Although this information is a bit skant, any advice would be greatly appreciated. Andy, in sunny Florida

I'd pay off the mortgages, at least the ARM. Nothing like having your own home not worrying about payments and such. Next, put the money in SAFE investments right now. Like a high yielding CD ladder or some Vanguard funds.

how soon do you want to have access to this money? i'd say for your age your retirement is under-funded. don't count on the inheritance until it's in your hands.

i'd pay off the ARM and then invest the rest into a tax-sheltered targeted index fund (Vanguard or Fidelity have good, low fee options) with plans to leave it alone until you retire. right now is a pretty good time to get into the market (nice and cheap at least).

wow.. i wish i had your problem

Won't you have capital gains taxes due on the sale of the business? If so, you need to set aside that money immediately.

In regards to the rest - no idea. Pay off any debt, ladder some CDs with varying maturity dates to lock 'em up a bit, and wait for the markets to settle.

If you do want to invest, I'd invest a regular amount in a regular timeline...say $3K every 2 weeks in an index or target fund.

Hmm. Interesting dilemma. Please post up later to keep us updated!

Sandi

I'd suggest paying off both mortgages and investing the rest in an index fund preferably with some sort of tax sheltering. . You're far to young to be dissuaded by market turmoil and since no one can time the market, and your goal is to invest long term, now is as good a time as any.

Please please, simply consult a professional. A Certified Financial Planner (CFP) or a CPA.
Don't look for advice in online forums for anything over $100K.

thats poppy cock. I think he should invest in my newly started hedge fund company. In fact he will be the first investor. Please PM me soon so I can give you the bank account to transfer your funds in. Minimum investment is $200,000. This is an elite group. We specialize in mortgage securities. Please tell your wealthy friends as well, the more the merrier.

On a serious not I agree 100% with Samantha when you have that kind of money you should have a professional..especially for tax implications that can come up.

I would agree with this statement if it were revised as follows: "Consult a professional, either a CPA or a very hard to find, rare breed Certified Financial Planner (CFP) that advises solely in your best interests, not theirs."

The last place I would send someone young with tons of cash on hand is to a snake-oil salesman CFP. The good CFPs are so rare a breed (and luckily GRS has a few of these folks right here!) that the lot has earned a terrible reputation (in my own opinion).

However, coming to a forum where no one has anything to gain is a good starting point. It should not be an end all - be all, but it is a good start in the right direction.

While I would generally recommend Vanguard funds, saying that they are a "SAFE investment", on par with a CD, is misleading.
Vanguard has tons of different funds each with their own objectives. Some are risky, some are not. The benefit of using Vanguard is that they have low fees and a respected name.
That being said, as a general recommendation, check out the Vanguard STAR fund. It is a 60/40 fund of funds portfolio (60% equity / 40% fixed). Not a bad place to start an allocation.

The CFP recommendation is a good one. Just make certain to focus on how they are compensated. Payment for services should align with your incentives, not theirs.

If you do wish to go with vanguard, you can get a low cost financial plan from one of their professionals.

If you open a Money Market fund with them and drop in over 100k (in order to achieve "Voyager" status), you can pay $250 and get a financial plan.

I think if you put in over 500k you can get this same plan for free.

I would definitely look to do something about that mortgage though. Having something that is going to reset is not good - perhaps you could pay off 1/2 or 3/4, and convert the rest into a home equity loan or something.

Well, Thanks to all for the valuable input. Although, Ill have to pass on the hedge funds :wink: First of all, I have absolutely set aside my cap gains tax monies. I have actually talked to the CPA that prepares my taxes who also prepares my father's taxes. He admitted being especially conservative and said he would pay off the homes first to get a guaranteed 6% (not taking into account the write-offs for interest expense of course). My financial planner, who is my father's estate planner, is on the fence about paying off the homes but recommends some stock in well established companies in order to beat inflation versus simply going ultra conservative, ie CD's, for a few % and possibly trailing inflation.

I agree that my 401 is tiny but can not put but so much in due to the "highly compensated individual" rule. I got back a check for $5,000 trying to max out last year. Actually, it was short about 5% from what I had put in... what a sham. What amounts to a loan to my 401 and lost money at that.

I'm thinking pay off ARM, invest 50-100k in big, blue chips, ie Target, Microsoft, Anheuser, J&J, etc. and let that simmer for 15-25 years. Ill definately research the Vanguard offerings. I can borrow against that if an opportunity arises. Continue to max 401 and save the rest (~175,000) for a possible buying opportunity due to recession 2009.

I definately am not putting it all on the line depending on the inheritance. Thanks for input and believe me, I know I am blessed. Lets hope we all have these problems one day. Andy

Andy, whatever you decide to do, I recommend to operate with the money that you do currently have, and pretend, for now, that you're not getting any inheritances. Better safe than sorry, especially since you're in the middle of a career change, and you're raising a couple of young ones.

Edit: I see you've made a reply that added some new information. Andy, how comfortable are you in managing and tracking individual stocks? Personally, I would recommend mutual funds instead, perhaps of the index fund variety. In fact, I'm rather partial to Target Retirement/Life Cycle/Freedom type funds, where asset allocation and rebalancing are all taken cared of for you.

Individual stocks also have their own set of risks. Again, all this depends on your investment style and risk tolerance.

There are a few well established companies that in the span of 2 months are now worth pennies. Buying individual stock in companies is a gamble at best. I don't think people who invested heavily in financial stocks the last few years have been beating inflation

It could be another sector that gets slammed a few years from now. The point is you need to diversify. Mutual funds in international companies, small value US companies, tech sectors, energy, real estate etc.

Point taken with the individual stock idea. I really know very little about stocks and trading. I just assumed, naively, that a well established company would be safe. Although, Lehman and Bear Sterns seem to come to mind to show otherwise. It seems that the concensus is to get a good index fund that is age approriate and aligned with my risk tolerance and make sure it has minimal costs and overhead associated with it.

Thanks again.