I inherited $3 million - investment suggestions?

Not that much wrote:

Not to sound like a dick, but $3M really isn't that much in the grand scheme of things these days. How much money do you have? You can donate a little bit of money here and there but to really lead a specific cause you're talking about putting down at least 6 or maybe 7 figures.

The people I know with $7M to $10M are blessed to have the freedom to pursue their dreams / not be forced to do things that their heart really isn't in, but they aren't rich enough to start doling out 5 and 6 figure checks left and right.

You need $30M+ from what I've observed to join that club.

I know I can't save the world, but I can sure make a difference in the lives of some who have nothing. I had nothing growing up and so have some insight there. I have no desire to increase my standard of living above the present level, when I can raise the standard for many in the bottom 10% who have nothing now. Those willing to work to get to the top deserve the chance to do so. Thanks, all, for the input.

The first thing I'd suggest is to take fifteen months' income from the money and put it into a savings account. Over the next 12 months, move 1/12 into a 1-year CD (generally known as "laddering"). Leave the remainder in the savings account. Then you're covered for a year of down time, plus money for immediate emergencies.

Second, find a lawyer and get a will. $3 million will smoke out relatives you didn't know you had. It's best to get all that sorted out early.

Third, find an investment advisor.

You find a lawyer and investment advisor by asking around for referrals.

It doesn't seem like you're getting a lot of responses to your original questions.

The first thing I'd probably do would be to establish a non-profit organization. If you're talking about giving away $3M it's probably better to get that inside of a non-profit (or at least some of it) because there are likely tax advantages to doing so. I'm not an expert, but I would guess that any returns you make on the money inside of the non-profit would be tax free. Also, you could write off expenses associated with your philanthropy and you'd have the organization to insulate you personally from any issues that may arise.

Your timeframe for giving the money away will dictate somewhat how you should invest it. If your timeframe is longer than a decade you should probably have it in something like stocks. If it's more near term keeping more/most in cash/savings is probably preferred. If I were in your situation I'd probably try to maximize the gains and seek to give away most of the returns (but preserve the principal). That's maybe something like $200k/year in your situation.

first let me echo that 3 million is not a lot and grand schemes are not possible. Invest in your community. Pick some established organization perhaps Habitat for Humanity a portion of that money can go to build a couple of houses. Then invest in the occupants of those houses- I say HforH because I'm told their screening does identify worthy families but just throwing a general idea- then invest in those families- job skills training- perhaps partner with a local continuing education organization or local community college. Fund education for the children- in this scenario it starts with a tutor program to get them up to speed. If you work with say four families that get HforH houses you can set up a group educational plan that includes daycare and tutors- better Business Bureaus often have retired members to act as mentors- partner with them to take the investment in these 4 families and maximize it .

Yeah it is a kind of all the eggs in one basket thing but if it works it can make a difference you can see.

think this way-

Repair and upgrade housing for families that have been identified as exemplary foster care parents- civic and affinity groups often identify this type of family by naming them foster parent of the year- use other groups to identify worthy families. Adding a half bath to a foster house can be high impact. or think a group home- partner with existing organizations to identify the best of the best and give them a step up. Just buying and installing an extra freezer or expand refrigeration capacity-- a small thing but high impact in improving quality of care.

HforH does a building blitz pay the utilities bill one month a year for every household- perhaps at holiday season to lessen their burden and open up a couple of buck for a present.

HforH does a blitz- partner with a local landscape yard- you buy the materials they supply education on how to plant and maintain. Nothing instills pride of ownership better that proper landscaping-- in water poor areas-- work with local water company converting water sucking lawns to beautiful water friendly landscapes-

Buy a truck or two so your local food bank can go fetch instead of hope for a delivered donation. Buy two from a local dealership and see if they will donate free routine maintenance and see if you can cut a deal on the price for side panel advertising for the dealership- be willing to buy and they might be willing to donate those extras like a set of new rubber at x miles or donate a used truck outright.

Spending the money in the community is investing in the community

Really, once you become caught up with all the trouble of superfluous money, your appreciation for life drops.

You should just give it to me.

I would pay off my mortgage if you had one. Just don't lose it all in a few years like Allen Iverson did with $150 million.

As a professional investor, I think it would be wise for you to invest a third of this money into penny stocks. The other third should be invested in rare coins while your last third should be invested in more penny stocks.

Two chicks at the same time

if I was in your shoes wrote:

It sounds like you are in a position where you should be thinking about preserving the principal more than earning a return. If i was in your shoes I would put 1/3 into laddered CDs of about $200K each, 1/3 into an S&P500 index fund and 1/3 into a good intermediate term bond fund.

Don't waste your money in bond funds. They will lose money as interest rates rise. A better option is brokered non-callable CDs, which earn as much as high quality bonds, are fdic insured, and you cannot lose money with them. Just be sure to purchase no more than $500K (assuming your married) from any one bank. The fdic will ensure you for that amount at each bank you invest in. Rates are much higher than what you'd earn from a standard bank cd.

Better shoes wrote:

if I was in your shoes wrote:

It sounds like you are in a position where you should be thinking about preserving the principal more than earning a return. If i was in your shoes I would put 1/3 into laddered CDs of about $200K each, 1/3 into an S&P500 index fund and 1/3 into a good intermediate term bond fund.

Don't waste your money in bond funds. They will lose money as interest rates rise. A better option is brokered non-callable CDs, which earn as much as high quality bonds, are fdic insured, and you cannot lose money with them. Just be sure to purchase no more than $500K (assuming your married) from any one bank. The fdic will ensure you for that amount at each bank you invest in. Rates are much higher than what you'd earn from a standard bank cd.

what do those pay, say for a 1 year CD?

...is it more than an online savings account? you can get 0.9% last time I checked, with no commissions or lockups as with CDs. Still FDIC insured.

Is this sum pre- or post-inheritance/estate tax (the sum may be subject to both taxes depending on the decendent's state of residence)

Bottom line: Don't count your chickens until after the state.

I'd use some of it to over fund permanent insurance with one of the 4 mutual companies.

If you're insurable.

Liquid 6% growth, tax deferred, without being susceptible to the ebbs and flows of the market.

agip wrote:

Better shoes wrote:

Don't waste your money in bond funds. They will lose money as interest rates rise. A better option is brokered non-callable CDs, which earn as much as high quality bonds, are fdic insured, and you cannot lose money with them. Just be sure to purchase no more than $500K (assuming your married) from any one bank. The fdic will ensure you for that amount at each bank you invest in. Rates are much higher than what you'd earn from a standard bank cd.

what do those pay, say for a 1 year CD?

...is it more than an online savings account? you can get 0.9% last time I checked, with no commissions or lockups as with CDs. Still FDIC insured.

If you're only interested in 1 year, I agree high yield savings is the way to go. At Ameritrade, non-callable, new issues are offering:

3yr 1.7%

4yr 2.0%

5yr 2.4%

7yr 2.7%

10yr 3.1%