what to do with $230k payout

It's tough for anyone to say without knowing a whole lot more about you. Your age, your income, your family (children, college), your other investments, your debt, your risk tolerance, etc. etc. Put the money in a safe place for 6 mos to 1 year for now. Some banks are paying a decent interest rate at this time. Citi for example has a one year CD paying 3+%. To be safe put it in two different banks.

Then spend some time reading up on personal financial management, and talk to several fee only financial managers and get some ideas before you plunge into anything.

BTW, anyone telling you he knows this guy from his country club that can make you 15% a year every year, run run away from him like the wind.

There's far too little information in your post. What is your age? How much do you already have in savings? How is your retirement set up? Do you have a family? House?

Brian

Peter is absolutely right. You'll find this group to have great advice, but only with those missing details. My answer for a 60 year old ready to retire is probably very different that that for a 30 year old.

The one answer few (?) will argue is if you have any outstanding credit card debt you carry month to month (aside from a 0-3% teaser rate) pay that off. That's a no-brainer.

Let us know some more details and you'll get more advice to consider. Joe

As another poster mentioned, it depends on things such as your age, income, other assets etc.

But it also depends on your level of familiarity with finances.

Besides "stocks and bonds", do not shun simple investments like buying a condo and renting it out, as long as the relationship of rent to price is reasonable.

i

You think buying and renting a condo is simple? Been there, done that. It ain't simple.

In many ways, it is far more complex than stocks and bonds, especially if you go with a no brainer mutual fund like Vanguard Balanced Index.

-- Doug

Are you acquainted with asset allocation concepts? If not, spend a weekend experimenting with those linked at

how the tools tend to allocate a person more towards (investmentgrade) bonds as a person ages and/or s/he wants less risk.

yeah - forgot the profile.....50-ish - with a college bound kid - Unlike most, we don't really have any debt, just $60k on the house, and were not expecting or counting on the $230k - The college funds were pretty much ear marked, but the downturn certainly crunched that.

Most of our current portfolio is split between stocks @ Schwab, and then funds via Fidelity, TRowe, & Vanguard. Thought spreading would be good - small, large, domestic, foreign, etc - until everything was trashed... Have been just putting current cash into some ladder CD's to keep my hands from messing around.

With $60K owed, do you even have enough interest to itemize? If not, paying it off is 6% (or whatever) tax free return. And not a bad feeling to kill it off. 50ish is not too soon to use this money to properly diversify. If your portfolio is heavily stock weighted, this may be the perfect opportunity to use the cash to balance closer to what makes sense for you. Spreading around is good, but a retirement mix is closer to 50/50 60/40, so that this last crash would only have had a 20-25% hit on your portfolio if that much.

Depending on your income, this is also a good time to make use of the Roth account, or pretax 401(k0 /IRA if you're not maxing those out.

Joe

Well then, put the extra cash in CD's and attend a couple of investing seminars put on by either Schwab or Fidelity.

I have been there, done that too. It is not simple, but it is not back-breaking either. And I have found it to be considerably more profitable than my adventures in stocks and bonds.

In a general sense, I would suggest working the cash into the allocation you had prior to receiving it. Make it fungible, and integrate it, rather than segregating it. That said, you might use it as a nice fluffy blanket to shelter your allocation a bit towards the conservative side. Or in less colorful terms, consider it an advancement of your planning goals. Just guessing, but it seems you might use the cash to bolster the college funds, first. That would be on the assumption that three years from now the financial crisis will be history, its causes outlawed, the portfolio of college funds recovers and you use it for your retirement. I.e. try to not sell depreciated stocks to pay for college costs.

For the present, cash is king, as the saying goes. A number of asset classes have crashed - stocks, houses, commodities. It sounds like you have a decent allocation and planning mind in place, and working towards that is always the best recommendation to anyone. Most media and funds, and private managers, and hence market prices, are focused of short-term moves with under a year time horizon. An intelligent planner should focus on outlooks for five and ten years or more.

But the financial and asset world has changed, and what to make of it is beyond me at the moment. Cash is king has a converse to it: it can buy more investment value, now. The big question is whether it will buy less, or even more, in the future. I'm thinking of buying a house, now - part personal, but also a proxy for gold if inflation comes around two years from now. My preference is buying producing assets - good, solid, companies with expanding markets. The days of doing one's homework carefully are back (if they in fact ever left).

What NOT to do with it is easy. Do not: a) buy a big boat, b) an extravagant vacation to Hawaii, c) his/hers big SUVs, d) more house than you can possibly afford, e) five plasma screen TVs, (etc.):-)

How about buying a big house boat w/plasma TVs, sail that to Hawaii, and tour around the Islands in the SUVs? Does it for me.

Actually considering the latest financial cesspool, I'd been better off and happier doing that than scrimping and investing "safely" all these years.

Chip

Some day I would love to go back into the USENET archives and read once again what experts recommended in those days when the stock market was rising ever upward and people were watching their savings grow nicely and looking for ways of making still better returns.

In those times, most experts realized that things would not always be fine and dandy and that large and small declines, blips, and bumps and stagnant periods in the market were sure to come. Wisely, they said: Stay the course. Don't think about the next year or two; think about the next ten or twenty years. Save regularly, put the money into a good mutual fund, and keep it there. Historically, the market has always had ups and downs. Historically it has always risen to ever new heights in the long run. No matter how bad it looks temporarily, it always bounces back! Think long term.

To me it is amazing how little of that kind of wisdom is being expressed at present. One would suspect that if it was good advice five years ago, it should still apply. And yet today I am finding more and more concern about safe places to put money, people looking at bonds and CD's, whether x is safer than y, and so on. I have even come across talk of taking money out of retirement plans and putting it somewhere else! And I havent encountered the phrase "dollar cost averaging" in a newsgroup in a long, long time.

It's still good -- you just have to be patient. :-)

More seriously, there are two subtle risks in spreading funds between companies that you might not be aware of:

1) Fees matter. If you expect a fund to earn 10%/year over the long term, and its expense ratio is 1.5%, that means it's taking away 15% of your expected earnings, and that 15% compounds. That can cost you a lot over the long term. 2) If you have two or more funds in the same asset category, and one or more of them is actively managed, you may be overweight in a small number of stocks without knowing it. That means that you're more exposed to risks in a small number of companies than you should be.

It might be worthwhile to review your portfolio looking for these two risks.