$200k in an IRA, unallocated. What's the safest investment?
"Note that long term you need to plan for possible inflation, so ""a little bit of return""  generally wants to be at least high enough to offset that plus ""a little bit"". Which is why just shoving it in a bank, while extremely safe, isn't usually the best choice.   You need to make some decisions about how you trade off risk versus return, whether you will comfortable riding out a downturn while waiting for recovery, and so on. My standard advice, as someone else who knows how little he knows: It's worth spending a few hundred of those dollars to talk to a real financial planner. (NOT someone who has any interest in selling you particular products, like a broker or agent!) They can help you ask yourself the right questions about comfort and goals and timeframe to pick a strategy which suits your needs. It won't be ""exciting"", but it sounds luke you agree with me that this shouldn't be exciting and ""market rate of return"" (about 8% annually, long term) is generally good enough, with more conservative positions as you approach the point of needing that money." if you don't intent to touch the money for 10 years or longer, then dumping 100% into a low-expense-ratio index fund seems like a perfectly reasonable thing to do. it is simple, low maintenance and fairly mindless. just remember to reinvest the dividends occasionally (e.g. every 6 months).  however, if you are the kind of person who is going to lose their nerve when the market goes down 30%, then putting some of your money into a bond index fund or even a treasury note fund would be better than selling stock in a down market. just figure out how much of your portfolio you are comfortable losing, and put that in stocks.  then put the rest in some stable value fund and watch it's value get slowly washed away by inflation while your stock investments rise through violent swings. The safest investment is probably a money market fund [originally I said a TIPS fund but they appear to be riskier than I had thought].  But you might not want to invest everything there because the returns are not going to be great.  High returns come with high risk. The best portfolio has some percentage (which may be 0) of your money in a safe asset like a money market and some in a risky portfolio (this percentage may also be zero for some people).  You should consult your own risk aversion and decide how much money to put in each.  If you are super risk-averse, put almost all of it in the money market.  If you want a little more return, put more of it in the risky portfolio.  This is a fundamental result of finance theory. What's the risky asset?  A fully diversified portfolio of bonds and stocks.  People don't agree on exactly what the weights should be.  The rule of thumb back in the day was 60% stock and 40% bonds.  These days lots of financial planners recommend 120 minus your age in stock and the rest in bonds.  But no one really knows what the perfect weights in the risky portfolio should be (the rules of thumb I just gave have little or no theoretical foundation) so you have to choose for yourself what you think makes sense. "Define ""risk-sensitive"": The point is, define Your risk, and your choices will narrow. Some investors worry more about what next months statement will show & lose sleep over it; some investors do not want to miss the average historical rates of return for equities (stocks) and are willing to tolerate fluctuations in monthly statements." "Your funds are in a retirement account.  Withdrawals from your IRA will be penalized if you withdraw before you turn 59.5 years old, and you appear to be decades away from that age. The general advice I would give you is to pick a ""target year fund"" that targets the year you turn 59.5.  The stock market is more volatile, but its average gains will protect you from inflation just eating your funds.  Bonds are in counterpoint to your stocks - more stable, and protecting you from the chance that stocks dip right before you want to withdraw. Target year funds start with higher amounts of stock, and gradually rebalance towards bonds over time.  Thus, you take your market risks earlier while you can benefit from the market's gains, and then have stability when you actually would want to retire and depend on the savings."
"Is it unwise to not have any kind of retirement account? etc. Yes.  :) Why?  Because they allow tax-free growth, and that's always good. and placed it in an online bank's checking account with 0.76% APY. If nothing else, move some of it into an online bank's savings account at 1.2% and the rest into a set of ""laddered"" CDs at about 1.5%. Do that to your ""six months emergency fund"" money, and whatever money you plan on using for a condo DP.   Invest the rest." Wells Fargo.  They have an account called PMA, an umbrella account for checking, savings, mortgage, and brokerage accounts.  It would cost $30/month, but I never had to pay because I have a rollover retirement account that is enough to waive the fees.  They count all accounts, including mortgage, which I used to have.  Oh, and no restrictions.  An added advantage is there are no fees for any of the accounts, nor for some other things, like bank checks, outside ATM fees, etc.    I'm in California, so I don't know if the same deal exists in other states.  But if you qualify for the free account, it's pretty good.  Actually, most of my investments are Vanguard funds.  And I have another rollover account with Vanguard, and never pay fees, but I only buy or sell from one Vanguard fund to another, and rarely since I have targeted retirement funds that are designed to be no maintenance.  For some reason, I trust Vanguard more than most other funds; maybe because I like their philosophy on low-cost funds, which they started but are now getting more popular. "You most definitely can invest such an amount profitably, but it makes it even more important to avoid fees, um, at all costs, because fees tend to have a fixed component that will be much worse for you than for someone investing €200k. So:  Edit: The above assumes that you actually want to invest in the long run, for modest but relatively certain gains (maybe 5% above inflation) while accepting temporary downswings of up to 30%. If those €2000 are ""funny money"" that you don't mind losing but would be really excited about maybe getting 100% return in less than 5 years, well, feel free to put them into an individual stock of an obscure small company, but be aware that you'd be gambling, not investing, and you can probably get better quotes playing Roulette." First, a Roth is funded with post tax money. The Roth IRA deposit will not offset any tax obligation you might have.  The IRA is not an investment, it's an account with a specific set of tax rules that apply to it. If you don't have a brokerage account, I'd suggest you consider a broker that has an office nearby. Schwab, Fidelity, Vanguard are 3 that I happen to have relationships with.  Once the funds are deposited, you need to choose how to invest for the long term. The fact that I'd choose the lowest cost S&P ETF or mutual fund doesn't mean that's the ideal investment for you.  You need to continue to do research to find the exact investment that matches your risk profile. By way of example, up until a few years ago, my wife and I were nearly 100% invested in stocks,  mostly the S&P 500. When we retired, four years ago, I shifted a bit to be more conservative, closer to 80% stock 20% cash. Distributions from an inherited IRA will be taxed as ordinary income and there are required minimum distributions for the inherited account. Assuming you were 55 at the time of your mother's death, your life expectancy according to the IRS is 29.6 years. Your required yearly distributions on $200,000 would be roughly $6800. For each year that you didn't withdraw that, you would owe a 50% penalty of the distribution amount (~$3400). That's probably better than the tax hit you would take if you pulled it all in as income in a 5 year window (ie. all right now since you're at the end of the window). Oh, ok. You have $3.8m cash to work with in creating a low-risk investment portfolio. All you need to do is pick investment options that stick to the three objectives of the fund. You may assume all the capital is available for immediate investment ($200k out of the $4m is set aside for scholarships so it must stay liquid). "True, absolutely safe are only death and taxes.  Apparently [US treasuries](https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield) yield far less than 3,5-4%, but I guess that's as ""100% safe"" as it gets.  However, best I could find while talking to various banks was a reverse convertible bond that yields 3,5% per year, tax excluded. Worst case scenario: 1) I got all my money back and gained 3,5% for one year. 2) after a few years, I find myself with pretty valuable shares and still cashed in the yearly 3,5%.  I was wondering if I got lucky with that, or if there are better things out there and if yes, where I should look. Honestly, in the age of negative interests, I'm more than happy to get enough interest to counter inflation." Immediately move your Roth IRA out of Edward Jones and into a discount broker like Scottrade, Ameritrade, Fidelity, Vanguard, Schwab, or E-Trade.  Edward Jones will be charging you a large fraction of your money (probably at least 1% explicitly and maybe another 1% in hidden-ish fees like the 12b-1).  Don't give away several percent of your savings every year when you can have an account for free.  Places like Edward Jones are appropriate only for people who are unwilling to learn about personal finance and happy to pay dearly as a result.  Move your money by contacting the new broker, then requesting that they get your money out of Edward Jones.  They will be happy to do so the right way.  Don't try and get the money out yourself. Continue to contribute to your Roth as long as your tax bracket is low.  Saving on taxes is a critically important part of being financially wise.  You can spend your contributions (not gains) out of your Roth for any reason without penalty if you want/need to.  When your tax bracket is higher, look at traditional IRA's instead to minimize your current tax burden.  For more accessible ways of saving, open a regular (non-tax-advantaged) brokerage account. Invest in diversified and low-cost funds.  Look at the expense ratios and minimize your portfolio's total expense.  Higher fee funds generally do not earn the money they take from you. Avoid all funds that have a nonzero 12b-1 fee. Generally speaking your best bet is buying index funds from Fidelity, Vanguard, Schwab, or their close competitors.  Or buying cheap ETF's.   Any discount brokerage will allow you to do this in both your Roth and regular accounts.  Remember, the reason you buy funds is to get instant diversification, not because you are willing to gamble that your mutual funds will outperform the market.  Head to the bogleheads forum for more specific advice about 3 fund portfolios and similar suggested investment strategies like the lazy portfolios.  The folks in the forums there like to give specific advice that's not appropriate here. If you use a non-tax-advantaged account for investing, buy and sell in a tax-smart way.  At the end of the year, sell your poor performing stocks or funds and use the loss as a tax write-off.  Then rebalance back to a good portfolio.  Or if your tax bracket is very low, sell the winners and lock in the gains at low tax rates.  Try to hold things more than a year so you are taxed at the long-term capital gains rate, rather than the short-term. Only when you have several million dollars, then look at making individual investments, rather than funds.  In a non-tax-advantaged account owning the assets directly will help you write off losses against your taxes.  But either way, it takes several million dollars to make the transactions costs of maintaining a portfolio lower than the fees a cheap mutual/index fund will charge. "First, two preliminaries, to address good points people made in comments. As AbraCadaver noted, before you move your $30k to something that might lose money, make sure you have enough cash to serve as an emergency fund in case you lose your income. Especially remember that big stock market crashes often go hand-in-hand with widespread layoffs. Also, you mentioned that you're maxed out in a 401k. As JoeTaxpayer hinted, this could very well already be invested in stocks, and, if it isn't, probably a big part of it should be. Regarding your $30k, you don't need to pay anybody. In general, fees and expenses can form a big drag on your investments, and it's good to avoid them as much as possible. In particular, especially with ""only"" $30k, it's unlikely that advisers can save you more than they cost. Also, all financial advisers have a cost: the ""free"" ones usually push you into investing in expensive funds that make them money at your expense. In that regard, keep in mind that, unlike a lawyer or a doctor, a financial adviser is not required by law to give advice that's in your best interest. When investing, there is a pretty short list of important considerations that you should keep in mind: (If anyone has any other points they think are similarly important, feel free to suggest an edit.) Practically speaking, I'd suggest investing in index funds. These are mutual funds that invest very broadly, in a ""passive"" way that doesn't spend a lot of effort (and money) trying to pick individual high-performing stocks or anything like that. Index funds provide a lot of diversification and tend to have low expense ratios. (Other, ""actively managed"" funds tend to be more expensive and often don't outperform index funds anyway.) If you're saving for retirement, there are even target date funds that are themselves composed of a small number of index funds (often domestic and international stocks and bonds), and will increase the proportion invested in bonds (safer) as they get closer to a target retirement date. See, for example the Vanguard Target Retirement 2045 fund. A fund like that one might be all you need if you are saving for retirement. Finally, you can invest online without paying any advisers. Not all companies are created equal, however; do your research. I personally highly recommend Vanguard, since they have a wide variety of no-load index funds and tend to have very low expense ratios. (No-load means you don't have to pay a fee to buy and sell.) Part of why they are inexpensive is that, unlike most financial companies, they are actually a cooperative owned by those who invest in their funds, so they don't need to try and milk a profit out of you. (Don't let that suggest that they're some ""small-potatoes hippie firm"", though: they're actually one of the largest.) I hope I helped. Keep posting if you have more questions!" Your approach sounds solid to me.  Alternatively, if (as appears to be the case) then you might want to consider devoting your tax-advantaged accounts to tax-inefficient investments, such as REITs and high-yield bond funds.  That way your investments that generate non-capital-gain (i.e. tax-expensive) income are safe from the IRS until retirement (or forever).  And your investments that generate only capital gains income are safe until you sell them (and then they're tax-cheap anyway). Of course, since there aren't really that many tax-expensive investment vehicles (especially not for a young person), you may still have room in your retirement accounts after allocating all the money you feel comfortable putting into REITs and junk bonds.  In that case, the article I linked above ranks investment types by tax-efficiency so you can figure out the next best thing to put into your IRA, then the next, etc. "You could put in in a Money Market Fund. These are designed to always be $1 per share, and not lose money. Of course, it still, very rarely, happens and is called ""breaking the buck"" when they do.  Sounds like the high yield savings is the way to go. The rates will be the same as what you can get from a Money Market Fund, but you also have the added advantage that the account is FDIC insured. BTW, using a Roth as an emergency fund is a terrible idea. It is true that, since you already paid taxes on your contributions, you can withdraw those contributions without incurring penalties. However, you have to file paperwork to do it, and since it's not common, the IRA custodian is likely to screw it up. Plus, you have to keep track of what were contributions, and what was investment returns, to not run afoul of the penalties. And it will take time to do it, which you may not have in an emergency. Considering you're only looking at getting 1% interest anyway, there's no reason to use a Roth account as an emergency fund. You can set those same automatic deposits into a savings account." Without making specific recommendations, it is worthwhile to point out the differing tax treatments for a Roth IRA: investments in a Roth IRA will not be taxed when you withdraw them during retirement (unless they change the law on that or something crazy). So if you are thinking about investing in some areas with high risk and high potential reward (e.g. emerging market stocks) then the Roth IRA might be the place to do it. That way, if the investment works out, you have more money in the account that won't ever be taxed. We can talk about the possible risks of certain kinds of investments, but this is not an appropriate forum to recommend for or against them specifically. Healthcare stocks are subject to political risk in the current regulatory climate. BRICs are subject to political risks regarding the political and business climate in the relevant nations, and the growth of their economies need not correspond with growth in the companies you hold in your portfolio. Energy stocks are subject to the world economic climate and demand for oil, unless you're talking alternative-energy stocks, which are subject to political risk regarding their subsidies and technological risk regarding whether or not their technologies pan out. It is worth pointing out that any ETF you invest in will have a prospectus, and that prospectus will contain a section discussing the risks which could affect your investment. Read it before investing! :) First thing to know about investing is that you make money by taking risks. That means the possibility of losing money as well as making it.  There are low risk investments that pretty much always pay out but they don't earn much. Making $200 a month on $10,000 is about 26% per year.  That's vastly more than you are going to earn on low risk assets. If you want that kind of return, you can invest in a diversified portfolio of equities through an equity index fund.  Some years you may make 26% or more.  Other years you may make nothing or lose that much or more.  On average you may earn maybe 7%-10% hopefully. Overall, investing is a game of making money over long horizons.  It's very useful for putting away your $10k now and having hopefully more than that when it comes time to buy a house or retire or something some years into the future.  You have to accept that you might also end up with less than $10K in the end, but you are more likely to make money than to use it. What you describe doesn't seem like a possible situation.  In developed markets, you can't reliably expect anything close to the return you desire from assets that are unlikely to lose you money.  It might be time to re-evaluate your financial goals.  Do you want spending money now, or do you want to invest for use down the road? With $800/month extra?  Do both. (I am ethnocentric enough to assume you live in the same country as me) First, figure out what your emergency fund should look like.  Put this money in a high yield checking or savings account.  Add to it monthly until you reach your goal.  It should be 3 to 6 months of your total monthly expenses.  It will be a lot more than $2k I suspect.  You will earn bubkis in interest, but the point of the emergency fund is a highly liquid asset for emergencies so you can choose cheaper car insurance and not buy warranties on stuff. With your $800/month, split it up this way: $416/month into a Roth IRA account at Vanguard (or Schwab or Fidelity) in the Star Fund (or similar low cost, diversified fund).  The star is $1000 to open, pretty diversified.  $416 is a lazy number that comes close to the $5000 annual limit for a Roth IRA in the US.  Contribute like clockwork, directly from your paycheck if you can.  This will make it easy to do and get you the benefit of dollar cost averaging. $200 or $300 into your savings account until you reach your emergency fund goal. $85 - $100.  Live a little.  Speculate in stocks with your vanguard account.  Or rent fancy cars.  Or taken a vacation or go party.  If you are saving $800/month in your early 20 be proud of yourself, but have a little fun too so you can let off steam.  It isn't much but you know you can play with it. Once you reach your emergency fund, save up for your future house or car or plane tickets to Paris.  Ask another question for how to save up for these kinds of goals. There have been studies which show that Dollar Cost Averaging (DCA) underperforms Lump Sum Investing (LSI). Vanguard, in particular, has published one such study. Of course, reading about advice in a study is one thing; acting on that advice can be something else entirely. We rolled over my wife's 401(k) to an IRA back in early 2007 and just did it as a lump sum. You know what happened after that. But our horizon was 25+ years at that time, so we didn't lose too much sleep over it (we haven't sold or gone to cash, either).