What would you do with an extra $10,000 dollars?

[MrsMike]

Sadly, I'm not asking for myself. I am asking for a friend. She received a small settlement for an injury. She used most to pay off the little debt she has. Already owns a home and a has a car that's paid off. No other bills other than utility and yoga membership. Used some to buy a few "fun" things. She now has just under $10,000 left and would like to know how to save it/make it grow. Right now she has the $10,000 sitting in a very bare bones plain savings account at a bank. Any suggestions for her? I know she has never invested before and is very afraid of the idea.

[MyTwoAs]

If she already has a cash emergency fund (6 months or so of expenses) then I'd go ahead and invest it in a retirement account - max a Roth IRA for this year and then either set aside the other part into a savings account to max the Roth contributions for next year or just invest the additional funds into a separate retirement account. If she doesn't have a cash emergency fund then I'd do that first. Just my $0.02.

[Denvergirlie]

Her choices are saving or investing, these are two very different things thou.

Does she have any savings already? 6+ months of expenses in a basic savings account? If her house needed some repairs, new roof, new furance, etc, does she have savings for that? If not, all of this goes to savings.
I have my savings in ING, although right now interest ratees are awful, so she's not going to grow it much, but will maintain it.

Investing involves risk, is she willing to risk her money? If so IRA is not wrong to think on, or other investments like bonds, stocks etc.

[MrsMike]

Thanks guys!

She does have a good savings account/emergency fund already. I believe she is very, very wary of any type of investment, so I guess her only option would be to continue to let it stay in savings...?

[Denvergirlie]

Bonds and CD's are "safer" instruments of investing over stocks.

I would suggest she head to the library and start with an "investing for dummies" book.

[TiredX2]

Originally Posted by MrsMike

She does have a good savings account/emergency fund already. I believe she is very, very wary of any type of investment, so I guess her only option would be to continue to let it stay in savings...?

It addition to the PP's great suggestion, I would remind her that just because she invests it in something like a Roth IRA does NOT mean that she has to be in stocks, real estate... whatever investment concerns her. While those have traditionally been the best retirement vehicles, you can also put your IRA money in something "safe"--- a CD or govt bonds, or something similar. You have the same "investment" options as outside of an IRA with the benifits of retirement savings.

Does she have long (or short) term financial goals? Look at them and decide where the $10K will help the most!