I just found out I will be getting about a 50K inheritance how much would I have in 20 yrs if I invested it?

Question

How should I invest it and with typical returns how much could I expect to have in 20-25 years when I need it for reitirement?

Answer 1

Congratulations on your inheritance but please accept my condolences on the loss of your loved one.

   There is no such thing as a typical return, that being said, the average annual return for any 30 year period in the stock market is 11.83%, as long as you actually stay in for the whole 30 years and don't jump in and out of the market.  People that try to time the market average a 3.2% return.  The difference between just staying in the market and being a market "timer" is over 8%.  So if you invest in a good index fund (a fund that follows the market average) you should make the average  return.  Let's say that your average return is 8%-10% over the 20 years (although that may be optimistic because you are not in the market for the full 30 years):

$50,000- 8%-$ 246,340.14 -20 years

$50,000- 8%-$ 367,008.80 -25 years

$50,000- 9%- $470,420,73-20 years

$50,000- 9%- $300,457.58 -25 years

$50,000-10%- $366,403.68 -20 years

$50,000-10%-$ 602,847.25 -25 years

If you have any earned income, start putting $5,000 into a Roth IRA and do that every year until all of your inheritance has been moved into a Roth.  That way when you take the money out, you will take the money out tax free.

Answer 2

I would look at Certificates of Deposit with a strong bank.

Many banks are financially strapped right now and to research for a strong bank is important.

Answer 3

If you want to be conservative, but SAFE, with your principal guaranteed,  do some online research to find a good solid bank with fairly strong financial ratios, etc. that has FDIC coverage and invest it in a Certificate of Deposit (CD).

Assuming interest is compounded quarterly:

4% int., 20yrs = $110,836, 25yrs = $135,241.

5% int., 20yrs = $135,074, 25yrs = $173,170.

Edit:

The market/returns on stocks, mutual funds, etc are pretty volatile right now.  Yes, the potential returns on mutual funds (for example) may be higher than CD's....but, the risk is higher also,  the rates of return can go down as well as up, AND you could also lose some of your principal (not get back what you put in).  Whereas, principal is guaranteed on CD's, as long as you have FDIC coverage.

Hope this helps, mule

Answer 4

If this is all you have for retirement, 20% in low % mutual fund 30% in a medium % mutual fund, and 50% in a high % mutual fund.  Put as much as you can in a roth IRA, the rest in a regular IRA.  Still in both cases do the 20%/30%/50% method.  It should give you double your money twice.  So in 10yrs it should be 150,000-200,000.  and it should turn in to 600,000-800,000.  in 20yrs.   I would and I am transfering a little money in to a roth IRA.  The way I am doing it.  If I make 30,000. and the next tax braket is 38,000. then I transfer 8,000 of my regular IRA in to my roth IRA.  I am doing this until I have at least 25% of my retirement assets in the roth IRA.  Now one thing is this money is not from an IRA, so part of it will have to go in to a regular investment account.  But still do the 20/30/50 method.  You may not get a win fall but you will be steady moving forward.

Answer 5

Um, don't invest now.  Put that in the bank and wait till things get better.