I've got 100K, now what?

UncleKraut · #1 02-06-2007, 06:16 PM

Basically I just inherited $100K and instead of blowing it at 1000NL, I decided to invest the money. I'm a relative investing noob, so I don't really know what to look for.

I was looking at CD's at some local banks, and the avg. return is about 5%. I feel that there should be better options out there.

I am risk averse. I'm not looking to buy penny stocks and make a quick buck. Rather, I'm looking for some solid investments for the long term, i.e. Mutual Funds, Blue Chips, etc...

How do I go about finding a good mutual fund? Do I sign up with Morgan Stanley or some other bank and have an advisor help me out, or should I do it myself through etrade or whatever? Are there any websites out there that rank mutual funds?

What would you do if you were in my shoes?

Thanks in advance.

ChromePony · #2 02-06-2007, 07:08 PM

This is a good place to get started...
link

Mondogarage · #3 02-06-2007, 07:28 PM

You can also go speak to an investment banking professional. However, for what it's worth, I'd recommend putting about 1/4 of that in a high-yield blue chip. There is some risk, but in the equity scheme of things, much lower than most.

One example is Bank of America stock. It pays a 4.4% annual dividend (almost on par with CDs) and also has the potential to gain (or lose) value per share. I've held 500 shares for about 18 months, and in addition to regularly quarterly dividends, the value of the stock itself has gone up another 22%.

The best thing you can do is set up a balanced portfolio that includes at least a couple of blue chips, a broad range of mutual funds (so that you can be in a few sectors, thus reducing variance, if you will), and take a flyer on a couple of more speculative plays. (I don't mean penny stocks.)

Morningstar is the primary mutual fund ranking service. However, you can find Morningstar ratings on Yahoo, on CNBC.com, on many other cites.

This isn't the best forum to try to get too deep into it, but the main thing you want to be able to compare with a mutual fund is its performance against other mutual funds of the same type and investment strategy.

GL. I'm no stock tout, just a fairly small time investor who has finally gotten above water after some ill timed tech investments back in the day. But if you want a couple stocks that have performed well for me the last year, I can recommend Silicon Precisionware (SPIL), and Sun Microsystems (SUNW), which has finally returned to profitability.

Also, Fidelity Contrafund (FCNTX) has been a consistent good performer for me on the large cap mutual fund front.

gull · #4 02-06-2007, 07:34 PM

Index funds. They have relatively high returns (they match the stock market and beat mutual funds, on average) and relatively low risk (compared to individual stocks, which are very risky).

For your own sake, never invest money in some stock because a random dude on the internet made some money with it in the past (no offence, anyone).

Mondogarage · #5 02-06-2007, 07:46 PM

I totally agree, gull, and I'm not advising he invest in anything that's done okay for me. After all, who knows what will happen tomorrow. My gains are already there. (Oh, and no offense taken, of course not.)

If you go the index fund route, look for funds with lower cost and fee structures. This is especially true for index funds which are the investment equivalent of ABC poker. The index fund manager isn't actually adding value, but only matching the makeup of whatever index that fund is tracking.

Frankly, the first thing you should be doing is going to those you know offline and asking them if any of them have worked with a certified financial planner, and if so, what they thought of their experience. Before you can figure out what specific investments will be right for you, you need to figure out your short term and long term financial goals, and what your risk tolerance level is.

ilikeaces86_ · #6 02-06-2007, 11:26 PM

Just go to vanguard.com put 25% in the S&P 500 index fund, 25% in the small cap index fund, and 50% in the total international stock index fund and voola you have your money invested better than most morons out there.

ChromePony · #7 02-06-2007, 11:42 PM

[ QUOTE ]
Just go to vanguard.com put 25% in the S&P 500 index fund, 25% in the small cap index fund, and 50% in the total international stock index fund and voola you have your money invested better than most morons out there.

[/ QUOTE ]

This is surprisingly accurate

Scorpion Man · #8 02-06-2007, 11:59 PM

[ QUOTE ]
Index funds. They have relatively high returns (they match the stock market and beat mutual funds, on average) and relatively low risk (compared to individual stocks, which are very risky).

For your own sake, never invest money in some stock because a random dude on the internet made some money with it in the past (no offence, anyone).

[/ QUOTE ]

Dog bites man.

ilikeaces86_ · #9 02-07-2007, 01:29 AM

[ QUOTE ]
[ QUOTE ]
Just go to vanguard.com put 25% in the S&P 500 index fund, 25% in the small cap index fund, and 50% in the total international stock index fund and voola you have your money invested better than most morons out there.

[/ QUOTE ]

This is surprisingly accurate

[/ QUOTE ]

Respec

jively · #10 02-07-2007, 12:27 PM

[ QUOTE ]
[ QUOTE ]
Just go to vanguard.com put 25% in the S&P 500 index fund, 25% in the small cap index fund, and 50% in the total international stock index fund and voola you have your money invested better than most morons out there.

[/ QUOTE ]
This is surprisingly accurate

[/ QUOTE ]
I like it too, except for "voilà."

-Tom