Investment/financial advice for total newbie

[Wolfer]

I recently came into a good chunk of money. I didn't give it much thought, as I've never owned such an amount before and just put it into a regular savings account. Having seen the amount it generates in interest in just this regular savings account, I'm wondering whether I would be better off actually investing some of that money for a potential higher interest rate. 

How would I go about this? I have zero money or finance skills other than simply tracking my monthly income and expenses. I'm also located in Europe, should this be relevant. 

[+ Vegas_Millennial]

1 hour ago, Wolfer said:

I recently came into a good chunk of money. I didn't give it much thought, as I've never owned such an amount before and just put it into a regular savings account. Having seen the amount it generates in interest in just this regular savings account, I'm wondering whether I would be better off actually investing some of that money for a potential higher interest rate. 

How would I go about this? I have zero money or finance skills other than simply tracking my monthly income and expenses. I'm also located in Europe, should this be relevant. 

First figure out when you'll need/want to spend the money.

Are you going to pay cash to buy a new house in the next 5 years?  Are you going to slowly withdraw a little each year for the next 10-20 to supplement your income?  Or is it all going to be tucked away for 30+ years and left to relatives or a charity? 

Once you know the timeline of when the money is going to be spent, a Financial Advisor can help you decide where to put it in the meantime.  If you're going to spend it all within 5 years, keeping it in cash, CDs, etc , makes sense.  It won't grow much and may not even keep up with inflation, but at least you won't lose anything.  If you're going to keep it 10-30+ years and very slowly spend it, then investing in the stock market (an index fund) will help it grow faster than inflation even if the value drops occasionally due to recessions.

[+ Vegas_Millennial]

1 hour ago, Wolfer said:

I recently came into a good chunk of money. I didn't give it much thought, as I've never owned such an amount before and just put it into a regular savings account. Having seen the amount it generates in interest in just this regular savings account, I'm wondering whether I would be better off actually investing some of that money for a potential higher interest rate. 

How would I go about this? I have zero money or finance skills other than simply tracking my monthly income and expenses. I'm also located in Europe, should this be relevant. 

 

 

 

Edited 20 hours ago by Vegas_Millennial

[Lotus-eater]

If you're considering investing some of the money in stocks (which you should do if you don't plan to spend some portion of it for another 5+ years), you might want to look at a simple target date fund, which will give you an idea of a good stock-bond allocation based on when you plan to retire (or are already retired). Being in Europe, you'll have to decide whether you want to invest solely in European stocks, the U.S., or the entire world (the US stock market has been outperforming international stocks for quite a while but international stocks beat the US last year, which may signal a long-term shift or it could be just a temporary blip). 

If you are domiciled in Europe, you'll also need to consider your country's tax rules.

Edited 20 hours ago by Lotus-eater

[Nue2thegame]

All of the above advice is excellent. If you really have “zero money or financial skills “ it will be important to find a good, trustworthy financial advisor to help set this up. His interests should be aligned with your, I..e. ideally. his compensation should be pegged to how your investments perform, not how many products he can sell you. Good ones can be difficult to find. 

[+ nycman]

Low-cost index funds offer broad market exposure with minimal fees by tracking a market index, such as the S&P 500. Top providers like Vanguard, Fidelity, and Schwab offer funds with low expense ratios as low as 0.02% or even 0.0%, such as Vanguard Total Stock Market (VTI), iShares Core S&P 500 (IVV), or Fidelity ZERO Large Cap Index Fund (FNILX), according to US News Money, NerdWallet and The Motley Fool. 

Examples of Low-Cost Index Funds

• Fidelity ZERO Large Cap Index Fund (FNILX) provides zero expense ratio access to the large-cap stock market, says Ceros.

• Schwab S&P 500 Index Fund (SWPPX) is another low-cost option with a low expense ratio of 0.02%, notes Ceros and Charles Schwab. 

• Vanguard Total Stock Market Index Fund (VTSAX) and Vanguard Total Stock Market ETF (VTI) offer broad exposure to the entire U.S. stock market at a low expense ratio.
• iShares Core S&P 500 ETF (IVV) and Vanguard S&P 500 ETF (VOO) are popular options that track the S&P 500.

 

You're welcome.

[+ FrankR]

2 hours ago, nycman said:

 

Low-cost index funds offer broad market exposure with minimal fees by tracking a market index, such as the S&P 500. Top providers like Vanguard, Fidelity, and Schwab offer funds with low expense ratios as low as 0.02% or even 0.0%, such as Vanguard Total Stock Market (VTI), iShares Core S&P 500 (IVV), or Fidelity ZERO Large Cap Index Fund (FNILX), according to US News Money, NerdWallet and The Motley Fool. 

Examples of Low-Cost Index Funds

• Fidelity ZERO Large Cap Index Fund (FNILX) provides zero expense ratio access to the large-cap stock market, says Ceros.

• Schwab S&P 500 Index Fund (SWPPX) is another low-cost option with a low expense ratio of 0.02%, notes Ceros and Charles Schwab. 

• Vanguard Total Stock Market Index Fund (VTSAX) and Vanguard Total Stock Market ETF (VTI) offer broad exposure to the entire U.S. stock market at a low expense ratio.
• iShares Core S&P 500 ETF (IVV) and Vanguard S&P 500 ETF (VOO) are popular options that track the S&P 500.

 

You're welcome.

You did read the part where he @Wolfer is based in Europe, right?  The websites and investment houses you listed are all US based with limited (mostly institutional) operations in Europe. Blackrock ETFs are common in Europe, the ones you mentioned are not. 
 

You’re welcome.

Edited 16 hours ago by FrankR