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What is the best route to invest $50,000?

I'm a recent college graduate with no outstanding loans or debts. I live at home where food is provided and my car is fully paid off, so my monthly expenses are minimal. I have $50,000 in a checking/savings account earning just $1 a month. What's the best way to invest this money in order to get the most bang for my buck?

Investing, Lifestage Based Planning
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January 2017

The first step is to identify what the funds will be for. An example of this would be grad school, down payment on a home, starting a small business, retirement, etc.

The next step would be to identify the time horizon. Will the funds be needed in 5, 10, or 20 years? If you’re going to be investing funds for the short term like 1 to 3 years, you should steer clear of the stock market and stick with CDs despite the low rates. If you are investing with a longer-term time horizon, it would be completely prudent to allocate a portion of your investments to stocks.

Lastly, you need to identify your risk tolerance. Consider how comfortable (or uncomfortable) you would be experiencing a 10% to 15% drop in the value of your investments. If you couldn’t sleep at night, it might be the wrong investment for you.

I wrote an article called Diversification Is Not Enough that goes into greater detail on this subject. I hope you find it helpful.

Please note that this should not be considered investment advice and is only educational in nature.

Best of luck!

David N. Waldrop, CFP®

January 2017
February 2017