Earlier today, I published part 1 of What Would You Do With a Windfall. If you missed that it might be worth catching up. What did I ask the bloggers? Simply this:
Where is the single best place to invest a $50K after-tax windfall now? Assume the following: you don’t need the money for at least 10 years, you’ve already max out 401k and Roth IRAs. Pretend that the windfall came under a couple conditions… 1) You can only invest it in one area. 2) If your investment doesn’t make 6% a year you lose it all.
Silicon Valley Blogger at The Digerati Life responded with the following two possibilities:
For our particular case, I have two options that come to mind with regards to what I can do with an extra $50,000 or even $100,000. The first is to follow in the footsteps of Ben @ MoneySmartLife with a similar strategy [editor’s note: see part 1]: use the money to help continue financing the startup our family is trying to build at the moment. It would help us delay having to acquire any additional external investments that would dilute our ownership: self-financing would potentially allow us to reach a critical mass that could keep the business running on its own with positive cash flow. Of course, that’s a dream at this point, but that additional $50K would get us there!
Secondly, I could also consider using the windfall to fund my second child’s 529 account. Since my child is still very young, we would have almost 18 years before we would draw on this money. By virtue of a lump sum investment into a more aggressive area of the stock market, such as US small cap stocks or a combination of US small caps/emerging market exposure/foreign REITs, we may possibly fund his entire education on this one lump sum investment if the markets continue to be favorable.
Those are two great answers. What happens if markets don’t continue to be favorable though? Well Henry from Binary Dollar has a plan for that:
I would invest my money into energy and various fuels. People really like driving cars and heated homes. The demand has never gone down for it. Another thing I would invest in would be lumber/wood. People sure love their toilet paper…
If that isn’t some recession proofing, I’m not sure what is. It would offset the costs of his own use of those products as well. I wonder about the growth in such industries though.
Don’t miss part 3 of this series.
Let me know in the comments, what would you invest in? Can you guess what I would invest in? I’ll let you know in the conclusion of the series.