My dear departed mother-in-law left us a small six-figure sum in her will. The question is: What do we do with it? We want to put most of it in some type of investment instrument that can help fund our retirement. (There may be a new pistol in there somewhere, too. )

I will be 70 in March and my wife will be 63 this December. Not counting the house, which is paid for, we have money spread out in five or six retirement accounts from previous employers. We do not have a financial planner. Any thoughts?

I opened an IRA account on ETRADE and put money into good growth stock mutual funds. Just look around for some fund you like that has a 10,15,20 year track record of 10% returns. I like a lot of the vanguard funds but that's just me. You could open an account with any of the online trading companies and then just start looking for funds.

Stick it in a money market fund and get 4.7%-ish and do nothing with it for a few months.
Do some research and then do some more research. If you can find one or 3, pay a few hundred dollars for an hour or 2 of some fee only planners time to give you an idea of what to do or what they would do given your ages and your overall picture. Clean up your own estate plan.

Put it into something you understand. An easy way is to use index funds or mutual funds with a good and long track record.

quote:

Originally posted by ElToro:
Stick it in a money market fund and get 4.7%-ish and do nothing with it for a few months.
Do some research and then do some more research. If you can find one or 3, pay a few hundred dollars for an hour or 2 of some fee only planners time to give you an idea of what to do or what they would do given your ages and your overall picture. Clean up your own estate plan.

This is excellent advice. MMF rates are high right now due to the Fed raising interest rates. It buys you time to do some research and make informed decisions.

Jmho, and I am not a licensed advisor. I'm just a mid-60's retiree.

Right now I favor US bonds, T-Bills of 12 months or less. While opinions and predictions vary widely amongst the gurus, I believe the stock market will not do well in 2025. Low risk is my preference rather than gambling in hopes of higher returns.

Remember, higher risk does not mean better returns! It means you are more likely to lose money.

I buy t-bills directly from the government via my Schwab account. You can do it easily through any good brokerage such as Fidelity etc. Or you can do it on the treasury website, but that is another account to keep track of, so for simplicity I do it in my Schwab brokerage account.

A bond ETF can lose money, whereas if you hold a bond until maturity you will never lose money. I buy 3, 6, and 12 month bonds every month. Thus I have bonds maturing each month. I can either roll the proceeds back into new bonds or I can spend some of it.

At your ages, you should be heavily favoring bonds, not stocks. Something like 70% US government bonds, imo. The remainder spread in good etf funds across large cap and mid cap, value and growth. I like large cap dividend funds as a lower volatility exposure to stocks.

Were I seeing lots of positive factors for future economic growth, I'd accept more exposure to stocks. But I'd rather miss some gains if I'm wrong, not lose money if I'm wrong! The stock market has lost 40% or more several times in our adult lifetimes, and if my retirement savings lost half today it would ruin my retirement!

Everything other than US treasuries (held directly, not in a fund) has risk of loss. Gold, Silver, stocks, real estate, etc. Be diversified.

Be aware of financial advisors. Some are double dipping in fiduciary/nonfiduciary functions in the same meeting. Just be aware if you get them and they want to help you invest your money

Paying off your mortgage would be the first priority for me. Then any car loans. Then invest the remainder.

Instead of a money market, I would suggest putting it into XBIL which is an ETF of 6 month Treasury bills. Wait until February to figure out where the market is going.

This would be a safe bet against losing your money while the stock market figure its way after the election and the aftermath of the Biden economy.

90% of our funds are in either T-Bills or CD’s. We caught a deal on 17 month CD’s paying 5.65% earlier this year. We’re in our mid 70s and don’t want to take stock market risk.

Beanie babies.

Depending on the status of your retirement accounts at your age I would consider spending it over time. Why not?
I am not talking about blowing it. But just use it as you wish.

Machine gun(s)…you can enjoy your investment and sell it in 5-10 years for more than you put into it!

Small 6 figure?

quote:

Originally posted by ElToro:
Stick it in a money market fund and get 4.7%-ish and do nothing with it for a few months.
Do some research and then do some more research. If you can find one or 3, pay a few hundred dollars for an hour or 2 of some fee only planners time to give you an idea of what to do or what they would do given your ages and your overall picture. Clean up your own estate plan.

This.

Between this six figure windfall, your 5-6 retirement accounts, and being at retirement age, you would greatly benefit from (and can easily afford) the advice of an actual professional here.

Stick this money somewhere safe and easily accessible for the time being, like a money market or high yield savings account, where it can earn 4-5% while you consider your options. Then find a fiduciary financial advisor who works for a fee (not a percentage/commission). https://www.napfa.org/ is a good place to start looking.

Thanks all for the sound advice. One more question, Which machine guns?

And when selling a machine gun, the capital gain isn't reported to the gov't.

quote:

Originally posted by Imabmwnut:
Small 6 figure?

I assume he meant "lower" 6 figure. Either way, not a small sum.

Bob, were any of the funds inside of an IRA or 401(k), or were they just in a standard brokerage account or bank account? The right answer partially depends on the answer...

quote:

Originally posted by btanchors:
Bob, were any of the funds inside of an IRA or 401(k), or were they just in a standard brokerage account or bank account? The right answer partially depends on the answer...

This^^.

You want to keep anything you can in tax deferred and place the new money there too, if possible.
Be aware of required minimum distributions as they are guided by your parents ages, not yours and there are big penalties for doing it wrong.

Even if you end up elsewhere, I've found the Vanguard and Fidelity advisors to be worth talking to, to understand what you can or cannot put into tax deferred accounts.