Re: what are some ways i could put 300,000.00 to
zuki, I agree that a conservative investment and caution sound good here until he asseses the complete financial and personal situation. Perhaps what Bob Smith mentioned or perhaps a money market fund at Vanguard.
A lot of us like Vanguard because they seem less prone to fleecing you than other financial service companies. A nonfancy money market, bond or index stock fund (stock funds aren't a good idea yet--tell you why below) from Vanguard generally is no load (no comission) and low operational expenses compared to other companies and banks.
How to invest depends greatly on when you need the money and what you need it for. Your friend has had very traumatic life changing experience; his family and supporters need to take some time to learn what their life and spending needs are going to be like going forward, and it's probably too early to know all that yet. (If you read this board you'll see some early retirees have trouble adjusting to retired life, and this is something they planned for!)
I said stocks and stock funds are bad for now because stocks are volatile in the short term, and he may decide he needs to use some of that money now, so while he's unsure how the money will be used it should stay in a short-term secure place.
Here's some advice on financial planners: don't trust them. And don't let any know that your friend is looking to invest $300,000. I got hounded when I let it slip I was rolling over much less than that from a 401(k) to an IRA. To humor the people I listened to a couple of pitches, and knowing what I did I saw several ways that it was more expensive than my plans.
ronin was correct about money being just a tool. $300k isn't likely enough to retire on for the most frugal of healthy U.S. families of four, and life and finance just got a lot different, so it's going to take quite a bit of study and consideration to know how this money can best be used.
I don't know enough about your friend to offer solid advice, but here are some possibilities to think about.
- Need to understand what future income will be
- Need to understand what ongoing expenses will be
- If he has debt, paying it off effectively earns more than investing the money while carrying debt in most cases [bankruptcy being one exception]
- FDIC insures savings accounts only up to $100,000
- Need to understand if money will be used as an investment nest egg or if spending part of it now is beneficial
- Need to understand medical insurance/liabilities, SS benefits, tax credits/liabilities (federal and state), any other benefits from government, charity or community
- Need to understand how net worth may or may not affect the previous item
- For short-term investing, learn about CD's and money market funds and possibly short-term bond funds (Vanguard account highly recommended)
- For long-term investing, learn about bond funds, indexed stock funds. Opinions vary on stock fund investing; note that I say learn about it so he can decide for himself. Other long term options could be Real Estate, REITs, TIPS, iBonds, T-Bills and probably some other stuff I'm forgetting.
- $300,000 and its investment gains are very likely not enough to support him and his family going forward, even if he had no medical expenses and lived frugally.
- If bankruptcy is a consideration...well, I know nothing about it, but exteremely careful planning of the $300,000 with advice from an accountant and/or attourney is needed
- It may or may not be beneficial to spend much of it near-term for long-term durables like a house or needed durable medical equipment; those are just wild ideas off the top of my head, but the point is he wouldn't know yet whether investing the money is the most beneficial in his family's situation
I'm going to rail a little more against financial advisors: there probably are decent financial advisors/planners out there, but there are way more that are either unethical, uncaring, unknowing or otherwise not the best idea. Don't assume they'll take pity on his situation or know what's best for him. Like we say, put the money in a safe short-term place and learn about the options and he'll probably be way ahead of what any financial planner could do for him. However, an accountant or attourney may be needed in some situations especially regarding taxes and public benefits.
BTW, John Galt: Congrats on the condo!