Life insurance payout

[above included for reference, post snipped]

Your sister-in-law's sit is more complicated than your own.

My thesis on real estate to live in is that you can establish a 'footprint' in the market at a low cost today. The inescapable costs of home ownership are taxes and insurance (mortgages can be paid off, utilities economized, maintenance DYI, but taxes and insurance are based on the value of the property at purchase). Both taxes and insurance may increase, but hopefully by modest amounts (part of inflation).

Given the importance of a living space, and if you are not periodically required to move (job-related transfers), I'd go for using the 50k as a downpayment. She already has the student loan covered, and it is a declining balance. Housing prices have dropped almost in half, so it's hard to not argue that an opportunity exists. Assuming you're not in SF or NYC or LA, you should be able to find a nice place, and establish yourselves at a low base cost. The usual and VERY significant caveats about buying a specific property apply - make sure you double-inspect, verify the title twice, make hard, accurate, estimates for maintenance costs, appliance age and replacement costs, utilities, etc..

For your sister-in-law, the "thrower" on your question is "where/how should" she invest. It's possible to exclude some things - The Ghaddafi Permanence Fund, Ancient Greek Rare Coins, The Free Medical Plan, Alien Spaceship Reconstruction LLP, Mansions of the Rich and Famous - but the range of investments and of advice is too broad to cover without more info on her personal perspectives and plans. Stay conservative with some flexibility until she has her career on a reasonably solid footing. I just personally suggest that an investment in a short course, or a couple of good texts, on personal accounting and budgeting would probably pay off handsomely over the course of many years.

I just personally suggest that an investment

That is an excelent idea. Also, a short book on real estate basics before buying the house would be a good idea. It might be wise to limit the purchase price of the house or condo to a figure such that the $50,000, (or what is left of it after a nice vacation for fun to celebrate the good fortune) would make a substantial down payment. Do not buy too much house. And by all means check out this site for lots of advice on how to save money when shopping for a mortgage:

Just researching, persisting, and getting a mortgage at 5% instead of

6% will save an enormous amount of money over a period of years. Because of your good financial situation, jobs, and good credit, you will have excellent negotiating power with mortgage lenders.

A lot of people on this forum may disagree with me but if she were my sister I would suggest she use the money for two things. First, establish a cash reserve for emergencies. The common rule of thumb for this is six months living expenses. Second, pay off as much of the school loan as possible with the balance.

Nurses are in high demand so your sister should be able to get a job quickly. A quick check shows that starting salaries for RNs with a BSN and no specialty training are close to $50K/year. This will, of course, vary from area to area but generally salaries vary in relation to living costs. In any case, she should be able to make a comfortable living starting the day after she graduates.

In spite of the low interest rate on student loans they are like any other long term debt in that you pay a very large amount in interest over and above the amount of the loan if you make the minimum payment each month. Getting out of debt sooner will save a lot of money in the long run and that is money that can better be put into her long term savings and investment program.

As others have suggested, learning the basics about budgeting, saving and investing will be an investment that will pay big dividends for the rest of her life.