know nothing of investing wrote:
If you inherited 100K, how would you invest it in this kind of scenario.
You and your spouse have solid, stable full-time jobs.
Debt-free (house paid off, cars paid off, no credit card debt).
Already contribute to the max on 401k.
Already have some other emergency savings.
2 teenage kids, but college expenses are already taken care of.
Age 45.
Is it possible to earn 8% or 10% annually with investments that aren't too risky? If so, which ones?
First of all, congrats on being in such a great position. ALMOST nothing that you do with that $100,000 will be bad...hell, even blowing it all on some fun wouldn't be bad considering the position you and your wife are in.
IF though you want to make some more money, then I would suggest either of the following two things:
1) Buy some NON-retirement mutual funds. These should be 100% stock funds, and you should mix them up a bit...small cap, mid-cap, large cap, and international. About 25% in each would be fine.
OR
2) Invest in some individual stocks. I almost NEVER recommend this, but you are in the position to be able to. Anyone who is maxing out their 401k and has no debt including a paid for house and already has college paid for for their two kids can afford to take a little risk for the potential reward with individual stocks. If you go this route, continue to fully-fund your 401k account. When you buy individual stocks, you should NEVER buy fewer than 5 at a time, and they should not be more than ~20% in any one sector of the market, so you buy one in manufacturing, one in food, one in telecommunications, etc. The reason you don't buy fewer than 5 is to limit risk. If one of them goes bad, you can sell and buy something else. Best to buy "best of breed" when buying individual stocks. Does take a little more of your time to monitor when you buy individual stocks, so you may opt for #1 above for a more hands-off approach.
I see that someone mentioned buying some bonds. That's not a horrible idea, but what you could ALSO do is to keep ALL of your invested money in stocks and then make sure to have 3 YEARS of expenses socked away in liquid (cash, Money Market Account, or CDs). The purpose of that money is NOT to make money but to use if the stock market goes down so that you don't have to deplete your stock funds. 3 years is usually enough time for the stock market to come back, and when you combine that with future Social Security income, you might be able to make it 5 years or more if there is a big stock market crash. Let's say you retire at age 62 with $2 million dollars in stocks. You take 4% of that a year for 3 years and then at age 65 you still have $2 million dollars (due to returns), but the market tanks. Let's even say it cuts your money to $1 million. Well, stock markets recover. Now, you use the 3 years of expenses and Social Security income until the market recovers. Let's say it takes 5 years. Well, $2 million dollars at age 70 is better than 2 million dollars at age 65 because you are only going to live so long...plus you still have your Social Security money. If you can, you slowly replenish the money to be used in case of a stock market crash, OR you just figure you will live 20 more years MAX and start taking 5% a year from the stocks and live it up.
Good luck. You are in an enviable position.