Recently Divorced - Need Advice

[cpolashenski]

I am recently divorced and received a settlement of about $ 250,000. I am 31 and know little about investing. I have no debt and make decent money so I don't need this money any time soon. Any advice?

[bbbamI]

IMO you should put the money in a money market fund or short term cd's, read Fidelity and Vanguard's websites, and search the archives of this board. I am a fan of having 6 months of emergency funds available to me at any time. Funding a Roth IRA each year is a good choice too.

Take your time and learn. Then follow through when you are comfortable and understand your risk tolerance.

[Ed_The_Gypsy]

Don't tell anyone you know that you have it. D O N O T! Do not give details to relatives.

Don't loan money to anyone. Double NO on relatives.

Call Vanguard and ask how to learn about investing.

Then, learn about investing!!! You can do it yourself. You don't have to pay anyone to 'help' you.

Put it into CDs until you get your confidence up. Don't swing for the fences. Get rich slow. You will find a lot of folks here like no-load index funds such as from Vanguard, but they go up and down (as does almost everything--except the stuff that goes down and down some more). Give yourself a ten-year horizon for such a fund. Look at their histories in the prospectuses. Don't invest in one that you don't like.

Start here. Ask more questions here.

[crazy connie]

I agree 100% with Ed and also suggest no spending for a while. Fancy vacations and cars will be better once the long term plan is worked out. Make sure you are not a target for scammers in the friend & family or Financial Advisor category. Read read read and read some more... Then ask questions here.

[cute fuzzy bunny]

Thats a bad avatar for picking up bunnies. they'll fear that you intend to put food producs on their heads and make Hasenfeffer out of them.

[frayne]

I second the no load index fund suggestion, maybe split equally between, S&P 500, Extended Market and International Funds, sit back and watch your money grow. Vanguard and Fidelity has both of these type of funds, with very low expense ratios.

[Olav23]

Or one of the target retirement funds through vanguard or t rowe price. You basically pick the year you plan to retire, and buy that fund. They do the work of allocating it for you.

For instance, if you want to retire in 2045, pick the Target Retirement 2045 fund. Investing for dummies

I also second the money market emergency fund and stashing as much as you can into non-taxed vehicles like IRAs.

PS, I love your Oolong avatar! So cute! I felt so bad when I heard he died.

[Oldbabe]

As someone who's been there, done that, I suggest following the above advice. After divorce, you need to spend a couple of years grieving before making any big decisions, like buying a house or moving. I ignored this advice, which was a mistake. But it seems that most of the big decisions I made right after my divorce were tainted by the emotional devastation.

[Rich_in_Tampa]

Not sure anyone can give you advice without more information.

What are your needs for that money, if any. What tax-deferred opportunities do you have available? Any consumer debts to pay off? Do you have vague retirement plans in place? Do you have emergency money set aside for a rainy day?

There is no one-size-fits-all answer to your question. Provide as much additional information as you are comfortable with to get the best answers. General priorities I have seen:

Establish an emergency fund of 3-6 months expenses
Retire consumer debts
Max out retirement funds at work or at least as much as the employer matches
Make whatever lifestyle adjustments you feel are necessary (this is a tricky one)
Establish or confirm retirement plans and invest accordingly; you've received a few suggestions on this one.

Hope that helps.

[cpolashenski]

Thanks guys! Lots of good advice all over this forum. I have no debt and no expensive hobbies or anyting. I was maxed out on the 401 k even before the divorce and have always had an emergency fund.

Thanks for the advice on buying a house and moving. I was actually thinking it would be a good idea to do both but I had a nagging voice in the back of my head saying that was probably a bad idea to do that so soon. If I did buy a house though I would take out a mortgage, I think, and not use this money.

[Mwsinron]

Yep no load index fund sp 500 or whatever would work fine.

[FancyBear]

Originally Posted by cute fuzzy bunny

Thats a bad avatar for picking up bunnies. they'll fear that you intend to put food producs on their heads and make Hasenfeffer out of them.

You stole my avatar.

[Darryl]

Sounds like you're on good financial footing. I agree with the other comments about waiting to make big financial decisions until you are past the emotions.

I saw several suggestions to read and was surprised nobody yet had mentioned "The four pillars of Investing".

[kcowan]

It's not that big a deal. Because you are uncomfortable with investing, stick it in Vangard and go on with you life.

[FinanceDude]

Originally Posted by kcowan

It's not that big a deal. Because you are uncomfortable with investing, stick it in Vangard and go on with you life.