Expert: Paul Henneman - 8/8/2005

Question
I just recently retired and I've received the lump sum of my retirement money. I can't access it w/o penalty until the end of 2008. What are some options for parking my money, and having it work for me/flourish and grow?  I'd prefer something low risk... any information you can offer would be greatly appreciated...

Answer
Gloria,
   Thank you for your question! There are several options for you, depending exactly on what type of person you are and level of risk you are willing to take. Here are some examples:

Money Market account. Perfectly save, no risk at all. But a maxmimum of 2% return per year, this should just about keep up with inflation, so your money will not grow. It will not shrink either! My favorite money market account is www.NetBank.com, the best interest payments I have seen, and fully FDIC insured up to $100,000. Very important, just in case the bank fails. (It won't, they have been growing by leaps and bounds through acquiring other banks).

Mutual funds. You could expect on average a 10 to 15% return from a mutual fund portfolio. More risky, if the economy falls on hard times, your investments could fall in value. But you can protect this by having several different mutual funds in different areas, perhaps one that specializes in real estate, one in utilities, one in technology, one in health car, etc. The best known and respected website for mutual fund information is www.morningstar.com

My sincerest advice for you would be to combine the above two. Put 50% of the amount in a perfectly safe money market account, or CD (you can do this at any major bank), and the rest in several mutual funds.  

There is a great resource out there to introduce you to the specifics of the above, along with other investment alternatives. "Investing for Dummies" will give you the basic information you need to decide what types of investments are best for you, both pros and cons of each.  I strongly recommend that you get this (it is in most major bookstores or online at www.amazon.com) and read it before any action. Then form a plan, feel free to follow up with me at that point with your ideas if you think it would be of further help, and get your fund situated in a way that you are comfortable with for the next few years.
So please do not hesitate to follow up with me if I can be of any additional service!

Sincerely,
Paul Henneman
President
ValuEngine, Inc.
www.valuEngine.com
www.VEInstitutional.com
www.VEReports.com