Having a large sum of money to invest can be exciting and scary at the same time. If you handle it right, you could be set for life, or at least have a great retirement planned. If you handle it wrong, you could end up back at square one, trying hard not to be bitter. There are key concepts to keep in mind when investing large sums of money. Understanding these concepts can help you invest with confidence.
Accept that your investments will be for the long haul. If you invest half a million in the stock market and then sell the first time Wall Street starts to plummet, you are going to lose money. Stocks are typically set up to go the duration, and, according to CNN Money, you need to let the money ride so it can recover any downturns that occur.
Decide how much money you are willing to put into high risk-high yield markets and how much you want to put into safer but slower-growing investments. Having a clear-cut picture of how you want to invest your funds before contacting a broker will help you avoid impulse stock purchases and taking frivolous investment chances.
Interview several financial managers and brokers before choosing one. Ask them for client references who will be willing to talk with you about their investment experience. Check with the exchange, state and federal courts as well as civil courts to be sure the broker is not embroiled in legal issues. Ask the broker questions about investment philosophies and how he would handle different crisis scenarios. Choose a broker whose philosophies are aligned with your own.
Open several IRAs and CD money market funds. These typically have a slow growth rate, but they will provide you with some security in knowing the money is tucked away and will most likely never be lost.
Monitor your investments. You can take classes in investments, check the stock exchange on a regular basis and maintain a measure of understanding about where your money is and how it is doing. Be sure to share questions and concerns with your broker as they arise so you can maintain a good relationship.
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