Windfall from settlement - Where to put it?

[Boogaloo]

I recently received a settlement which I would like to invest wisely, and safely at the same time. I have virtually zero knowledge on what might be the best option for me, but I have been reading this forum again recently because I don't want to just let this money stagnate in the bank at below 1% interest.

Is it a wise idea to invest $100K into a CD ladder right now? If so, are the ones that Fidelity offers competitive enough to jump in? Again, I am clueless here, and have very little tolerance for the stock market at this point.

It's pretty much this: I have $100K I didn't have a week ago. I do not want to let it rot in the bank. I am pretty much risk intolerant. What is the best option? I will not need to touch this money for the next 5 years. I am pretending like I never had it, never knew I was going to get it, and now that I have it, I want to grow it.....safely.

Anyone?

P.S. Here is a screen grab from Fidelity this morning:

[bjl584]

How old are you? How long till you retire? Are you employed? Any major financial plans coming in the next few years? Do you have any debts?

We'll need some answers to the above to be able to answer you

thanks

[disneysteve]

If you won't need this money for 5 years and your main concern is safety, then brokered CDs and Treasury bills are the way to go. You can buy a 5-year CD for 3.45% right now. I probably wouldn't dump it all into a 5-year as the rates may still rise so maybe split it 5 ways and buy a 1, 2, 3, 4, and 5-year issue. For the shorter terms, Treasuries are paying more. For 3 years and up, CDs are paying more.

[Boogaloo]

How old are you? How long till you retire? Are you employed? Any major financial plans coming in the next few years? Do you have any debts?

We'll need some answers to the above to be able to answer you

thanks

Thank you!
I am self employed. We have zero debt other than our mortgage and what's left of a 0% interest loan on a car payment (less than $5,000.00 owed). My wife still works, and we are doing really good at this point in our lives. No major financial plans coming in the next 3-5 years. This is more a question of the best way to put this 100K to use, than it is a broader retirement related question.

If you won't need this money for 5 years and your main concern is safety, then brokered CDs and Treasury bills are the way to go. You can buy a 5-year CD for 3.45% right now. I probably wouldn't dump it all into a 5-year as the rates may still rise so maybe split it 5 ways and buy a 1, 2, 3, 4, and 5-year issue. For the shorter terms, Treasuries are paying more. For 3 years and up, CDs are paying more

Definitely wont need the money before the 5 year mark. I can tolerate some minor penalty for early withdraw/termination in case of a worst case scenario incident where we just need that money to be liquid.
What sort of treasuries would you steer me towards for a better look at the options?

[Jluke]

No debt? But < 5k car loan and a mortgage.

Current mortgage balance and rate and term? Is it your forever home?

what’s your monthly car payment?

windfalls don’t have to be managed right away. Some people suggest hanging on to the money for 6 months to make a decision.

of course if you are just doing safe things with the money then you might not need a lot of time to decide.

but what if you paid off the car?

or the mortgage if balance is low enough?

[ua_guy]

Just remember you are potentially on the hook for state and federal taxes on that settlement. I think personal injury settlements are the only ones which are exempt. Make sure you find/know the answer to that before doing anything with the money unless you have other means to cover the bill.

[Petunia 100]

If inflation is 8% and your money is earning anything less than 8%, is it really growing? A pretty good case can be made that your money is actually shrinking. Something to consider when desiring to keep your money safe.

You might consider I-bonds for some of your money. Currently, they are paying 9.62% I believe. You can buy them at treasurydirect.gov.

[QuarterMillionMan]

Petunia's pro-tip is astute, although $10,000 max per year. I would max today with that $10,000. The remaining $90,000 any of the other above recommendations are solid. But if you are like me, I might take another $10,000 and get some bitcoin which is cheap right now about $24,000, but don't blame me if it falls more. I might do another $10,000 in precious metals. At any rate it's a nice problem to have, good luck.

[crazyliblady]

If you are super risk averse, you could do a high interest earning savings account. Yes, they are out there. I have one earning 3.92%. As for what you should invest in, you should look at when you will retire, your goals, whether you have any debts, and use that to help you make a decision. A fee only financial planner could also help. I do like disneysteve's idea of CDs and bonds, though.

[Petunia 100]

If you are super risk averse, you could do a high interest earning savings account. Yes, they are out there. I have one earning 3.92%. As for what you should invest in, you should look at when you will retire, your goals, whether you have any debts, and use that to help you make a decision. A fee only financial planner could also help. I do like disneysteve's idea of CDs and bonds, though.

Which bank is that, CrazyLibLady?

[Jluke]

If you are super risk averse, you could do a high interest earning savings account. Yes, they are out there. I have one earning 3.92%. As for what you should invest in, you should look at when you will retire, your goals, whether you have any debts, and use that to help you make a decision. A fee only financial planner could also help. I do like disneysteve's idea of CDs and bonds, though.

Yes but in your other recent post you said that rate is only good up to $1500

[disneysteve]

Petunia's pro-tip is astute, although $10,000 max per year. I would max today with that $10,000. The remaining $90,000 any of the other above recommendations are solid. But if you are like me, I might take another $10,000 and get some bitcoin which is cheap right now about $24,000, but don't blame me if it falls more. I might do another $10,000 in precious metals. At any rate it's a nice problem to have, good luck.

OP said they are "risk intolerant" and want the money to grow "safely". Crypto and metals are both highly speculative. Neither really fits that description.

OP, you mention having money earning less than 1% at the bank. First step should be to get it out of there. Put it in a high yield account. Ally just raised their rate to 1.75%. The Vanguard Federal Money Market Fund is paying 2.11%.

As for Treasuries, which I recommended earlier, they are quite easy and super safe to buy. I'm with Vanguard but I'm sure Fidelity has a similar interface where you choose the duration you want and it shows you the available issues. Right now you can get up to 18 months at up to 3.27%. For durations longer than 18 month, brokered CDs are better paying 3.4 to 3.45% for 2-5 years.

[crazyliblady]

Which bank is that, CrazyLibLady?

Community America Credit Union

https://www.communityamerica.com/

[crazyliblady]

Yes but in your other recent post you said that rate is only good up to $1500

Yes, that is true. I transfer the interest every month to another account.

[disneysteve]

Yes, that is true. I transfer the interest every month to another account.

That is way too much trouble for very little reward. That’s under $59/yr interest on $1,500.