Investing inheritance money, settlements or lottery winnings

If you are planning on investing inheritance money, a settlement, lottery winnings or other source of funds you have recently acquired, your next step may depend on how much money you have to work with. If you are thinking of investing inheritance money in large sums, your profile might be closer to a business owner or other professional who has made a lot of money and has just recently started to think about investing. If that's the case, you can read about that profile here. Otherwise, assuming you have a small to medium amount of money to work with, here are some of your options:

• Stocks
• Mutual Funds
• Bonds
• Money market accounts

And depending on how much you have to work with, you may also be able to invest in real estate. Real estate is a great investment, either for price appreciation or to rent out for monthly income. If you don't have enough to pay all cash for a property, you'll need to get a mortgage for whatever you finance, so you should be prepared to come up with a downpayment - which could be anywhere from 5% to 20% of the purchase price, depending on the lender and your credit situation.

What are your financial plans?

Probably the first thing to think about before investing inheritance money, lottery winnings, or other money you've just come into, is what are your longer term plans for this money? Do you want to use it for your retirement? Do you want to build something that you will eventually pass on to your children or grandchildren? Maybe you just want it as a nest egg for emergencies? This is important to consider, because the answer to these questions will help decide the amount of risk you may want to take (or not take).

Your age will also be a factor - if you are a young person under about 30 to 35, you have a lot more time to grow your money, so you may be willing to take some additional risk, like invest in individual stocks. If for some reason you lose money one year in your stock investments, since you won't need the money for years you'll have plenty of time to turn that loss back into a profit. If you are older and want this money for your retirement, you may want to stick with lower risk investments such as bonds or even high yielding cash accounts to ensure it is there when you are ready to retire.

Getting started

The best way to get started is to get a basic idea of the main investment types I listed above along with their risks. You may already have a good idea of what you want to do with your money - for example if you are thinking about something very safe like a money market account, you can open this yourself online and be in total control of it. On the other hand, if you are thinking about stocks or other mix of investments but don't feel comfortable doing it yourself, you can always consult with a financial advisor who can tailor an investment plan to your specific situation. You may choose to also have that person manage your money for you, or you can manage it yourself if you prefer. It all comes down to what you are most comfortable with, and how much time you have to devote.

If your really not sure what direction you want to go in, you can find more information on the different investment types here.

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