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Hi All,

I am using my daughter's screen name. Inherited my parents house, sold it, now I need to know how to manage/invest the funds from the sale. Will be 65 in 12 years. Need suggestions for approximately $100k. The rest will be used for paying off all bills, credit cards etc.

Thanks for the responses.

Anj's Mom.
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Need suggestions for approximately $100k.

Mom, do youself and all of us a favor and don't use any of it for law school tuition!
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Author: Anjanettea Date: 7/31/01 5:17 PM Number: 31079
Inherited my parents house, sold it, now I need to know how to manage/invest the funds from the sale. Will be 65 in 12 years. Need suggestions for approximately $100k.

Since I didn't see any answers to your question, I thought I would throw in my $0.02.

(First, I assume that you mention that you will be 65 in 12 years, because that is when you plan to retire.)

One thing I would highly recommend is reading William Bernstein's great book, 'The Intelligent Asset Allocator'.

With 12 years to go before needing the money, I would consider putting the money into the Vanguard Total Stock Market Index, VTSMX. Historically, over long periods of time, this index has done about 11% per year. However, you will have to be able to stomach the volatility, which is historically around 20% (standard deviation) in a given year. Ask yourself how you would feel if in the first year you lost $20K of the $100K, leaving you only $80K?

If this would bother you a lot, consider putting some of the money in short term bonds (or a bond fund like Vanguard GNMA, VFIIX). Many people use a split of 75% stocks and 25% bonds. Based on the charts in Bernstein's book, this would reduce your volatility to around 16% and the historical gain to about 10%.

People who don't want as much volatility (keeps them up at night), use a mix of 50% stocks and 50% bonds. This cuts the volatility to about 11% and reduces the average yearly growth to about 9%.

If you are very cautious, and want even less risk, a mix of 25% stock and 75% bonds reduces the historical volatility to about 9% and the historical yearly gains to about 7.5%.

Actually, these historical numbers are all based on 20 year treasuries and not the Vanguard GNMA Fund. So, the gains using the GNMA fund should be a little higher, while the volatility appears about the same.

Russ
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