Where to begin?
Hi Terry. I am late 50s, divorced and never dealt with finances before. Just sold my house (no capital gains), and have $800K to invest (just sitting in savings account last week). I need up to $600K to be liquid in circa 11 months if I decide to buy condo. Someone recommended combo of bonds (40%) and Vanguard index funds, while keeping $50K cash. I have ZERO idea how to even begin. How does one out dough in an index fund? Do you agree with this approach? Will I be able to have liquidity if I want to buy condo? Frankly, this all terrifies me, but right now this is all that I have and I need to be cautious and build retirement. I have very little stomach for risk.
Thank you so much. Am paralyzed, quite honestly.
Terry Says
I’m glad you’re paralyzed and didn’t follow that “investment advice”! Bet it came from a broker!
You need to take a break from worrying about this money. It should remain in a bank — or perhaps divided between two or three banks — in 6-month CDs or money market deposit accounts, where you won’t earn any interest, but where it will be safe and liquid. You might miss some stock and bond market profits –but again you might miss some losses. I’m not going to get into a lesson about how you can lose money in each — just keep it safe and liquid for now, while you figure out the next steps in your life.
If you can make it past year-end, the Christmas holidays, then it will be time to start thinking about making major changes.
Right now, you need to figure out where you will live temporarily, how you will earn some income (and how much you might be able to earn), and even what city you might want to live in!!
So just let the money sit for a while. It’s what I call “chicken money” – -money you can’t afford to lose. It belongs in the bank for now. Please write to me around Labor Day and let me know what you’re thinking and how you’re doing. In the meantime, it’s ok to tell everyone who asks “what are you going to do” that you’re giving yourself a present of “the present” and not thinking that far ahead, that you’re enjoying having your own life back to live. Attitude is everything! Please do write back down the road.
