<p>I’m going to be inheriting a bit of money soon - around $1,000,000. What’s the best way to invest it so that I make $50,000 (5%) a year?</p>
<p>I’m not allowed to take interest. (money made from investing is ok, but interested accumulated by doing nothing like puttin in a bank is not)</p>
<p>Invest it in low cost index funds, ETFs, bond funds, put some of it in a bank, specifically in a growth CD, and money market funds. Are you not allowed to take interest because your muslim? If you are muslim, taking interest from investing in the market is the same as from taking it from the bank.</p>
<p>Go to UBS or something, not college confidential.</p>
<p>collegeboy: Not really; by your logic, Muslims would not be allowed to invest in any stock market.
I guess neither of us is wrong; its a matter of how you practice your religion.</p>
<p>and yea ESSR, i was thinking something like Merrill Lynch to be safe</p>
<p>you’re big enough that private wealth management divisions will want to talk to you.</p>
<p>my advice is worth what you’ve paid for it, but the money I have is in emerging markets funds (volatile but positive), energy stocks, and I just put about 20% of my portfolio back into REITs after the previous two months’ crash. it may not be enough to shift the market, but it’s a vote =) especially the emerging markets. pick 'em carefully, but they’ll do 10%+ per year on average, with the odd 20% year cancelling out a flat or slightly negative year every now and then.</p>
<p>OK, even more serious advice now:</p>
<p>If I were about to inherit a million dollars, from which I was expected to do good things, I would take a few weeks and read as many books on investing as I could stomach. I’d research which the classics were, which the hot new ones were, and which were recommended by older professionals who’d been investing for 30-40 years. i’d read at least half a dozen if not more. i’d play with some fake portfolios to steel my nerves against short-term losses, I wouldn’t go into any fund without a 5-year history, I wouldn’t put money in a stock whose industry I didn’t understand (from having read an investment book on it, at minimum).</p>
<p>Then I’d call the professionals in and ask their advice, but I’d be armed with my own knowledge, to tell the snake oil salesmen from the ones with good intentions. And perhaps in a few years I could go out on my own.</p>
<p>I do have two specific pieces of advice: </p>
<p>(1) you can make 5% with 100% certainty, 6% with 99% certainty (bonds), or 8% with more volatility (domestic large-cap stocks), or 10%+ with even more volatility and significant downside risk. In the long run, if you’re sufficiently diversified, barring a major crash your returns will be worth the increased risk.</p>
<p>(2) A lot of the basic lessons that books and articles and primers tend to smack people with (i.e., don’t take such a huge appetite for risk, keep a share of your portfolio in bonds, diversify WIDELY, trust stock-picking to the professionals…) are directed towards those who are in a more typical investing age (like, say, 50+). They are not geared towards someone who is younger and has a big time horizon. Assuming you are in your 20s, we are in a risk-taking phase of our lives, in which we can try out different careers, different girlfriends, different business ventures, and certainly more risky investment decisions. That’s not to say BAD investment decisions, but ones in which there are both significant exepcted returns and significant risks (and balancing the two is a skill learned carefully, and sometimes learned the hard way). Don’t be scared off by risk. Understand it, and use your age to your advantage.</p>
<p>Lastly, a question: how do you KNOW you will be inheriting $1MM soon? Do you have specific plans to off a relative? Will you need a good lawyer? =)</p>