I just got an extra $25,000. Don't really need it to pay debts, and I already have a pretty good emergency fund ($20k). I'm already maxing out my Roth IRA each year at $5k.
So, i figure I'm going to invest it. I'm thinking vanguard mutual funds, getting some index funds like SP500, emerging markets. What do you guys suggest? And what are ETFs, are they too risky.
I'm 31.
Ummm...give it to me.
I'm 24.
ETF's are great in my opinion. If you don't know, it stands for Exchange Traded Fund. It is a derivative product, which I know is a dirty word in some places, but I really like them.
Basically the same idea as a mutual fund, except you have a single security that is based off the value of a particular commodity, or index. Benefits over mutual funds can be liquidity (not always the case) and fees. While you may pay a fee on one end of a mutual fund transaction, with an ETF you pay your normal commission like any other stock (again, not always a benefit anymore). The benefit that I like the most from ETFs is diversity for my smaller portfolio. I don't have 2500 minimum buy investments for ETFs like most mutual funds do. Personally I tend to purchase in 1000 dollar increments, so if I've got 10,000, I can pick 10 ETFs, instead of 4 mutual funds.
What to do with this money, I don't know. If you don't already own a home that's a nice down payment.
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if you don't consider yourself to be a sophisticated investor, I would either hire a financial advisor or use the vanguard target retirement funds.
You could send in 10% of this money each month for the next year or so, and then forget about it. The fund will adjust to being more conservative as you get older, and should match the performance of big cap stocks as a whole, Which should be pretty good, but who knows.
I would put $10,000 more in the "pretty good emergency fund," making it that much better at $30,000.
I would put $1000 each into five things related to emergencies, that make them less likely. For example: 1) Preventative medical care, 2) Enhanced job training for your current work (books you read, tools you buy and use, important class your take, software to buy and master, etc.), 3) Insurance upgrade: auto/fire/flood/home/disability/health, so if one of those emergencies comes, you are covered with something better than your $30K "emergency fund." 4) Car and home maintenance, 5)Current bills paid more ahead, so your savings are insulated for a longer time.
That leaves $10,000. Here's ten separate ideas, each for $1000.
1) Do something that is cooler than anything you have done in the last year or two and enjoy it.
2) Give ten people in your community, who do good things, a note of thanks with a check for $100, or make it anonymous and stick in a $100 bill.
3) Go on Craiglist and get the two very most appealing and useful things that you can get for $500 each, after negotiations.
4) Buy stock in a company you want to succeed, that has good recent earnings in proportion to its share price.
5) Buy stock in a currently unpopular company, that has good recent earnings in proportion to its share price.
6) Buy clothes that would be your best outfit for a special occasion and start going places in them once per month.
7) Invest in something that could make you money as a second job/hobby/or new career if you wanted to switch.
8) At a place like Costco, where prices are less inflated, get an replacement or upgraded one or two of these items that you would need the most: mattress/television/laptop/refrigerator/washer/dryer/dishwasher/heater/air conditioner. Make your daily life better.
9) $1000 cash at home, in bills, that you take part out with you when you go shopping, as cash is spent slower than a credit card is swiped
10) $1000 to spend, part at a time, to do things with friends and family, tickets to the game, gasoline for the trip, their birthday/anniversary/graduation gifts, the party you host, or the good things you bring to the party.
Good luck.
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F*** off and die