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Depends. If you have high risk tolerance and won't need this money until retirement, you should deposit it in your choice of Vanguard Total Market or Vanguard
by patio11 12y ago
Depends.
If you have high risk tolerance and won't need this money until retirement, you should deposit it in your choice of Vanguard Total Market or Vanguard Retirement 2050~2065, and forget about it for the next ~35~50 years.
If you anticipate needing to actually spend it within the next few years, or you are risk adverse, you can put it in CDs, which will earn you virtually nothing but let you withdraw it at any time. You'd probably want to do a CD ladder, which would leave you with some money maturing in any given month, so you could use it without penalties.
The $100k is also not your primary asset at this point in your life. That would be the NPV of your nascent career. Depending on one's existing trajectory, I'd strongly consider building capital in oneself as opposed to investing it in the formal markets. For example, if one cannot program, $10k invested in learning to program will probably absolutely destroy the ROI of most investments in the public markets.
- dennisgorelik 12y agoWarren Buffett recommends investing into S&P 500 (instead of any managed fund), but aside of that his recommendation is pretty much identical: forget about it and focus on your primary job/business.
- spindritf 12y agoFunds suggested by patio11 are very popular index funds. They're broader than S&P 500 but it's the same principle.
- stephenmm 12y agoWarren Buffet's advise is great but I have never understood why he picks S&P 500 vs the Nasdaq? If you look at almost any time period the Nasdaq has outperformed the S&P by at least 1% (Annualized Growth Rate) which compounded year after year is a significant difference over your working lifetime (~%50 greater return after 40 years)! This is what I have been doing for the past 10 years and I am >2% (AGR) over the S&P.
- logn 12y agoWarren Buffet likes companies with strong revenues and profits, and importantly, companies that pay shareholders/owners. Nasdaq Composite is largely tech companies whose main value is growth potential and most of their profits get reinvested in the business.
- greenyoda 12y agoIt depends on other things too. For example, if you have credit card debt, you should probably pay it off instead of investing in a mutual fund, since the interest you pay on your credit card is much higher than the yield you can expect from a mutual fund.