Ask Terry Questions What to do with $25,000 at 55 years old?

What to do with $25,000 at 55 years old?

By Terry Savage on March 10, 2020 | Investments

Hello! I am 55 years old I have $25,000 to invest in the market. I have three small multi-unit rental cash flowing properties, and a pension at 57 years old. I also have $100,000 set aside for an additional rental property in the future. Is a vanguard mutual fund a good place to put my $25,000 at this point in my life?. If so,what type of mutual fund? My thinking is now that the markets are dropping,this is a good time to buy while stocks are on sale.

Terry Says

I love your optimism — but don’t be in a rush. First, if you are still earning income, consider opening a Roth IRA at Vanguard or Fidelity. This year you can invest $7,000 in a Roth at your age. You won’t get a tax deduction, but all the money will grow tax-free! I would suggest that you use the S&P 500 stock index mutual fund inside your IRA, or an Equity-Income fund (or a combination of both). You have time to make your money grow. You could even start by opening the account and putting your contribution into their money market mutual fund, and directing perhaps $500 per month to be automatically moved into those two funds each, on the first of the month!
I realize that uses up only $7,000 of your %25,000 avaailable– BUT you have until April 15th to open the Roth IRA and contribute for LAST year (2019). Then after that you can contribute another $7,000 for THIS year (2020) — using the same strategy of gradually moving into those funds. Keep the rest in the bank!



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