6 Financial Pros Share How They Would Invest $100,000
6 Financial Pros Share How They Would Invest $100,000
Jaime Catmull Thu, May 4, 2023
What would you do if you got a financial windfall of $100,000? In the current economy, it’s tricky to figure out the best way to make the most out of a large sum of money, so I posed that question to six finance and investing professionals to find out what they would do in that situation.
Here’s what they said.
Wendy Liebowitz, CFP, Education Consultant at Fidelity Investments
There are four areas I consider when it comes to any investment strategy: debt, emergency account, protection and growth.
First, pay off any high interest-bearing debt, such as a credit card with a high interest rate. Second, save at least three to six months’ worth of essential expenses, and keep those savings in a checking, savings or money market account so you can access them easily should you ever need to.
Third, depending on your risk tolerance and time horizon, consider protecting your principal, or the amount you invest, through methods such as a fixed-rate investment, which tends to be less volatile.
If retired, you may also want to consider protecting the amount of income you’ll need in retirement through guaranteed sources of income, such as Social Security, pensions and/or income annuities.
Once these three areas are addressed, allocate the remainder of the $100,000 to growth in a well-diversified investment strategy of stocks, bonds and cash, which can be done through individual securities, mutual funds, ETFs or fee-based managed solutions, just to name a few options. Following these four steps should help you balance risk and reward and put you in a better place financially to achieve your long-term goals.
Amy Richardson, CFP, Director With Schwab Intelligent Portfolios Premium
When exploring ways to invest a financial windfall of this kind, the first step should be to zero in on your goals. If you’re investing for retirement, a good place to start could be maxing out your 401(k), IRA or other retirement savings vehicles. If you’re looking to invest for future education costs, you may consider opening a 529 college savings plan.
Lastly, if you have a wider range of financial goals in mind — anything from building wealth to maximizing savings to paying down debt — a brokerage account may be a good fit as it allows you to invest in a wide range of assets, from stocks and bonds to mutual funds, ETFs and more.
Which types of investments you choose will depend on your goals and how much time you have to reach them. If you have a longer time to invest and you’re looking to maximize the growth of your investment, you may want to invest more aggressively by holding more stocks.
More conservative investors typically put more of their portfolio into bonds. Whether you are a more conservative or more aggressive investor, it’s important not to put all of your eggs in one basket and instead focus on building a diversified portfolio. It’s also important to avoid trying to time the markets, which is nearly impossible. The most important thing is to maximize the time your money has in the market to grow.
Jilliene Helman, CEO of RealtyMogul
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https://finance.yahoo.com/news/6-financial-pros-share-invest-130015593.html