What should you do if you find yourself having $400,000 in hand? Maybe it is an inheritance or an unexpected windfall. Whatever the reason, you should plan what your next step should be.
While you decide what to do with the money, you can place it in a federally insured bank or a credit union account. Such accounts are insured per depositor.
The interest earned will not be high, but these accounts are secure. You can also get more coverage by having several other accounts.
Any money you inherit will not be taxed. Although, assets such as retirement accounts, securities, and real estate will definitely have tax consequences.
The most productive way to spend your money is to pay off your debts. High-interest debts like credit cards or even mortgages could be settled in one go.
Having a financial planner would also help. They can advise you on how to invest your money. This will benefit you and help you plan out for the future.
What Is The Best Place To Invest $400,000?
There are many things you could do with $400,000. Investing in it is the best option. Given below is a list of the best places to invest.
- Crowdfunded Real-Estate
- Real-Estate Debt
- Real-Estate Investment Trust (REIT)
- Commercial Real-Estate
- Purchasing Rental Properties
- Index Funds
- Mutual Funds
- Dividend Stocks
Investing in these places assures you of generating a steady income at the end of the month. Whatever option you choose, it is advisable to consult a financial planner. Thus you can safeguard your investments.
Should You Invest $400,000 In Just One Thing Or Split It?
The advantage of making a lump-sum investment is that you get a higher balance on your money. Such an investment is very beneficial to long-term investors. Lump sum investing maximizes time in the market.
Experts advise investing all at once as soon as possible. The market may go up and down, but you should be committed to staying put. Your portfolio will improve as markets eventually go up over time.
The advantage of splitting your investments is that your portfolio will not be affected by a negative event. The risk is minimized, and your capital is preserved. It also gives you better investment opportunities to look into.
The drawback in such investing is that your portfolio returns are low. In addition, the transaction fees will tend to be expensive, and you will have to keep track of all your investments.
Whatever type of investment you pick will come with some level of risk. Your final decision is how you would tolerate the risk and stay the course.
What Makes A Good $400,000 Investment?
A good investment will provide you with a steady income as well as increase your wealth. Investing in Real-estate and index funds are highly lucrative. Both are guaranteed to give a good return.
But to minimize risk, short-term investments are recommended. They may not give high yields but do provide the following benefits :
- Low Transaction Costs
Investing in US treasury bills, short-term government bonds, or money market accounts will ensure your investment stays secure. It also gives the option of withdrawing your money without incurring a penalty.
When Do You Choose The Best Place To Invest $400,000?
Before investing, you should have a financial plan that lists your goals and risk tolerance levels. You should also have some knowledge of investing. Hiring a financial planner can help in advising you when to invest.
You need to keep track of market forces when deciding to invest. You can always invest in safe government funds until you decide to venture into the market. Once you are confident and committed to a plan, then you can invest.
Best Places To Invest $400,000 In 2022?
Investing your money is a great way of increasing your wealth and also providing you with additional income. But you must also balance your potential gains with the risks you take. Therefore, it is best to have a well-rounded and diversified portfolio.
The best investments for 2022 are :
- High-Yield Savings Accounts
- Series I Bonds
- Short-Term Government Bond Funds
- Short-Term Certificates Of Deposits
- S&P 500 Index Funds
- Dividend Stock Funds
- Value Stock Funds
- Nasdaq-100 Index Funds
- Rental Housing
Currently, these are the best investments for the year. But, whatever option you choose, you can be sure to increase your wealth.
Final Thoughts on Investing $400 000
You can invest your money and increase your wealth in many ways. But you need to find the best investment strategy that you can grow with.
It is best to do some research and then decide where you would want to invest. It is also prudent to hire a financial planner to help you get started.