What is a smart investment? ?

Question

iam getting a settlement soon from a commercial acciden what should i do with this money..i dont need it ! me and wife work. and are strong savers! we thought of buying land/or 1st home . start a store!

Answer 1

Now may be a good time to buy land and home.  But starting a store during an economic recession may not be such a good idea.  Because many consumers are cutting back on their spending.  And making profits in such an environment is difficult.

Answer 2

It depends on what you want the money to do for you and many other factors. Start below.

Answer 3

Without any more details (how much is the settlement, how much do you have saved, when you will be retiring, what debts do you have, etc.), it is hard to give you much to go on (and that goes for ALL of these answers, so take them all with a grain of salt).

First, you should pay off all your debts, if you have any.  This will be like giving yourself a raise, since you won't have to make payments on these every month.

Second, you should establish (or add to) your emergency fund.  This should be in a money market or CD (something that you can access in the case of an emergency), and should be equivalent to 3-6 months of living expenses.  $8,000 - $10,000 should be good for most people (again, I don't know where you fall on the income scale).

Next, you should max out both yours and your wife's IRA contributions for 2008.  The limit for most people in 2008 is $5,000.  If you already have an IRA set up, great - just add to it.  If you don't have an IRA, you'll have to set one up.  I would recommend calling a good mutual fund company (my favorites are Vanguard, T. Rowe Price, and Fidelity), and tell them your situation.  They can help you decide which type of IRA (Roth or Traditional) that would be best for you (I prefer Roth unless you're nearing retirement age), and also give you the best investment options based on your situation.

Once all these bases are covered, I think a great option would be to put the money towards a down payment on a house (or, depending again on the amount, buying a house outright).

I hope that helps.  Again, I apologize - I can't be too specific because I don't know your situation well enough.