How do I allocate $300,000?

I recently got a chunk of cash, $300,000 to be precise. How do I invest this amount? Here are some other points:

1. I have set aside $20,000 to spend on myself, take a vacation, etc.

2. What percentage do I invest in the bank, as it is supposed to be the safest?

3. How much do I invest in Mutual Funds that have a good reputation?

4. Is it wise to open a recurring deposit account? If so, how much should I allocate for that?

5. Some of my friends told me that investing in gold / silver is always safe. Is that true and if yes, how much should I invest in guilt edged securities?

6. I don't need any part of this money to meet daily expenses. They are taken care of by other finances, so this is just for investment purposes.

7. Charity is not something I would like to do with this money at this point of time. Maybe later, but definitely not now.

8. Any other areas where I can invest a certain percentage?

Thanks a lot!

Standard investment advice is that you should invest in a diversified mix of stocks, bonds, and money market funds. You want to buy a diversified portfolio of stocks as individual stocks are too risky. Most folks have a dificult time buying a properly balanced portfoilio of stocks on their own. They will misbalance their portfolio by buying all small stocks or all growth stocks, or some other misbalanced assortment of stocks. Unless you know what you are doing, it is best to buy mutual funds. I like Vanguard.com, other people like Fidelity, TIAA-CREF, and DFA. Buy no-load, low cost funds. If you are like most people you will invest part of your money aggressively in stock funds, and part conservatively in money market funds and bond funds. Vanguard.com has an on-line questionnaire which will give you an idea of how to do "Asset Allocation," determining how much to put in each type of fund.

If your company offers a 401K plan at work, try to invest the most you can. The money grows tax free, and some companies will match your contribution. Investing in a mutual fund IRA is also a good idea. If you have children, you may want to consider a 529 plan or other college savings plan that grows tax free.

I like index funds. Because of their broad diversification, you are less likely to have a dramatic drop in value. They also have the lowest expenses. For stock funds, I would suggest putting ~70-80% of your money in the Vanguard Total Stock Market Index Fund. and ~20-30% in a foreign stock index fund. However, there are many different opinions out there on what the best mutual funds are. Read the links below and form your own opinion.

I am not a fan of investing in Gold. It is a very volatile commodity with sudden rises and falls. If you want to invest in this put only a small amount in it. Another option would be to buy a small amount in a precious metal mining mutual fund. See this link:
http://inflationdata.com/inflation/Inflation_Rate/Gold_Inflation.asp

Buying a house instead of renting will save you a lot of money in the long run. You don't have to pay rent and you build equity in your house instead. Buying rental property can also be a good investment. However, being a landlord can be hard work, and many people are not good at it. If you don't know how to handle deadbeat renters, you can have trouble.

If you have high-interest debt, like credit cards, it is best to pay this off first before trying most of the investment ideas above. You should also have 3-6 months of salary saved up as an emergency fund in a bank or money market fund before trying more risky investments.

Believing advice you get on Yahoo answers can be risky, so read these websites for further information. If you find it too confusing, contact a professional financial advisor. They will charge you significant commissions, however.

Sources:

http://www.vanguard.com/VGApp/hnw/planningeducation
http://www.fool.com/school.htm
http://sec.gov/investor/pubs/assetallocation.htm
http://www.diehards.org/readsites.htm
http://finance.yahoo.com/education/begin_investing
http://finance.yahoo.com/funds/basics

Asset Allocation Calculators
(Determining how much to put in stocks and how much into bonds and money markets is a personal decision depending on your financial status. These Asset Allocation questionaires give you a rough idea how to do this. I like Vanguard best, but try some of the other sites as well.)
https://personal.vanguard.com/VGApp/hnw/FundsInvQuestionnaire?cbdInitTransUrl=https%3A//flagship.vanguard.com/VGApp/hnw/planningeducation/education
https://ais2.tiaa-cref.org/cgi-bin/WebObjects.exe/DTAssetAlcEval
http://www.ifa.com/SurveyNET/index.aspx

Web forum: http://www.diehards.org/
(Many investment web forums are overrun by scam artists. This one seems the most legitimate site.)

529 plans: http://www.savingforcollege.com

don't ask us nimwit call a real financial advisor

There isn't a set rule. It's what you feel comfortable and safe with.
If you pay off your house it's like getting an automatic 6% return (or whatever rate your mortgage is).. you'll save tons over the long haul. You could invest the money you are no longer paying into the mortgage into a mutual fund. Gold & silver aren't always safe. They are at very high levels now. But if the dollar keeps falling & inflation keeps going up, metals could keep rising too. It's kind of an insurance for your stocks..maybe 10%.
Don't turn your money over to any money managers. You can research your own mutual funds- buy into several. (Not all eggs in one basket). Ones that invest overseas or in emerging economies are popular because of the dollars fall. Note: Not many people say to pay off your house because you lose it as a tax write off. But I sleep better. It's a rare opportunity to be free and clear.

You should invest it in me.

It all depends on your risk level. Regardless of that, you should have 6 months worth of pretax income at your bank in a money market account (not fund). After that invest the max into an IRA. If you have kids make the max contribution to a 529 (college savings) plan. Precious metals are at all time highs right now, so it's probably not the best time to buy.
Open an accound with a brokerage, I use and recommend Schwab, but others are good as well, stay away from Merrill Lynch. This is where your risk assessment comes into play.

Higher risk stuff: Stocks, Options etc.
Medium risk stuff: Funds
Low risk stuff: Bonds
No Risk: Cash, CD's

The higher the risk the higher return over time. So you need to invest based off of what you risk level is. You may be in the high risk category and have 80% High risk and the rest dispersed evenly between medium and no risk. You may be older and unable to take that kind of risk and you should be heavily invested in Bonds, CDs and funds with maybe 20% in stocks.

Look for stuff with no-loads and lowest possible maintainance fees. those things will kill ya. Try to hold on to investments for at least 5 years to reduce tax penalties.

Good luck.

Please don't ask anyone here unless they're fully qualified to point you in the right direction.
Please seek quality financial advise ASAP
Good Luck (please don't blow it all at once)

you could invest a small percentage to me if you like? that would make my day!!

Try a Roth IRA, you should consider real estate. Now is the time to buy.

How old are you? Working or retired? Married or single? Young children or grandchildren? What would you like this money to do for you? Do you own any other investments? Do you own a home? Please read my profile and send me an email.

Well, with the remaining $280,000, pay off all your debt. Then, fully fund a Roth IRA. Then, buy an index fund, a growth stock fund, an income stock fund, an international fund, a bond fund, an a money market fund. Also, purchase shares of a REIT (Real Estate Investment Trust) and a commodity mutual fund that invests in gold. I would get a high yield savings account as well such as Amtrust, HSBC, and ING Direct. I would also purchase a 30 year treasury bond and ladder a few CDs.

Good luck in this day and age...........Many blessings!

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