$200k in an IRA, unallocated. What's the safest investment?
"Note that long term you need to plan for possible inflation, so ""a little bit of return""  generally wants to be at least high enough to offset that plus ""a little bit"". Which is why just shoving it in a bank, while extremely safe, isn't usually the best choice.   You need to make some decisions about how you trade off risk versus return, whether you will comfortable riding out a downturn while waiting for recovery, and so on. My standard advice, as someone else who knows how little he knows: It's worth spending a few hundred of those dollars to talk to a real financial planner. (NOT someone who has any interest in selling you particular products, like a broker or agent!) They can help you ask yourself the right questions about comfort and goals and timeframe to pick a strategy which suits your needs. It won't be ""exciting"", but it sounds luke you agree with me that this shouldn't be exciting and ""market rate of return"" (about 8% annually, long term) is generally good enough, with more conservative positions as you approach the point of needing that money." if you don't intent to touch the money for 10 years or longer, then dumping 100% into a low-expense-ratio index fund seems like a perfectly reasonable thing to do. it is simple, low maintenance and fairly mindless. just remember to reinvest the dividends occasionally (e.g. every 6 months).  however, if you are the kind of person who is going to lose their nerve when the market goes down 30%, then putting some of your money into a bond index fund or even a treasury note fund would be better than selling stock in a down market. just figure out how much of your portfolio you are comfortable losing, and put that in stocks.  then put the rest in some stable value fund and watch it's value get slowly washed away by inflation while your stock investments rise through violent swings. The safest investment is probably a money market fund [originally I said a TIPS fund but they appear to be riskier than I had thought].  But you might not want to invest everything there because the returns are not going to be great.  High returns come with high risk. The best portfolio has some percentage (which may be 0) of your money in a safe asset like a money market and some in a risky portfolio (this percentage may also be zero for some people).  You should consult your own risk aversion and decide how much money to put in each.  If you are super risk-averse, put almost all of it in the money market.  If you want a little more return, put more of it in the risky portfolio.  This is a fundamental result of finance theory. What's the risky asset?  A fully diversified portfolio of bonds and stocks.  People don't agree on exactly what the weights should be.  The rule of thumb back in the day was 60% stock and 40% bonds.  These days lots of financial planners recommend 120 minus your age in stock and the rest in bonds.  But no one really knows what the perfect weights in the risky portfolio should be (the rules of thumb I just gave have little or no theoretical foundation) so you have to choose for yourself what you think makes sense. "Define ""risk-sensitive"": The point is, define Your risk, and your choices will narrow. Some investors worry more about what next months statement will show & lose sleep over it; some investors do not want to miss the average historical rates of return for equities (stocks) and are willing to tolerate fluctuations in monthly statements." "Your funds are in a retirement account.  Withdrawals from your IRA will be penalized if you withdraw before you turn 59.5 years old, and you appear to be decades away from that age. The general advice I would give you is to pick a ""target year fund"" that targets the year you turn 59.5.  The stock market is more volatile, but its average gains will protect you from inflation just eating your funds.  Bonds are in counterpoint to your stocks - more stable, and protecting you from the chance that stocks dip right before you want to withdraw. Target year funds start with higher amounts of stock, and gradually rebalance towards bonds over time.  Thus, you take your market risks earlier while you can benefit from the market's gains, and then have stability when you actually would want to retire and depend on the savings."
First of all an IRA is a type of account that says nothing about how your money is invested. It seems like you are trying to compare an IRA with a market ETF  (like Vanguard Total Market Admiral VTSAX), but the reality is that you can have both. Depending on your IRA some of the investment options may be limited, but you will probably be able to find some version of a passive fund following an index you are interested in. The IRA account is tax advantaged, but you may invest the money in your IRA in an ETF.  As for how often a non-IRA account is taxed and how much, that depends on how often you sell. If you park your money in an ETF and do not sell, the IRS will not claim any taxes from it. The taxable event happens when you sell. But if you gain $1000 in a year and a day and you decide to sell, you will owe $150 (assuming 15% capital gains tax), bringing your earnings down to $850. If your investments go poorly and you lose money, there will be no capital gains tax to pay. Lots of good answers.  I'll try and improve by being more brief.  For each option you will pay different taxes: Index Fund:   Traditional IRA Roth IRA You can see that the Roth IRA is obviously better than investing in a taxable account.  It may not be as obvious that the traditional IRA is better as well.  The reason is that in the traditional account you can earn returns on the money that otherwise would have gone to the government today.  The government taxes that money at the end, but they don't take all of it. In fact, for a given investment amount X and returns R, the decision of Roth vs Traditional depends only on your tax rate now vs at retirement because X(1-tax)(1+R_1)(1+R_2)...(1+R_n) = X(1+R_1)(1+R_2)...(1+R_n)(1-tax) The left hand side is what you will have at retirement if you do a Roth and the right hand side is what you will have at retirement if you do traditional.  Only the tax rate differences between now and retirment matter here.  An index fund investment is like the left hand side but has some additional tax terms on your capital gains.  It's clearly worse than either. Firstly, I'm going to do what you said and analyze your question taking your entire family's finances into account. That means giving you an answer that maximizes your family's total wealth rather then just your own. If instead of that your question really was, should I let my parents buy me a house and live rent free, then obviously you should do that (assuming your parents can afford it and you aren't taking advantage people who need to be saving for retirement and not wasting it on a 25 y/o who should be able to support him / herself). This is really an easy question assuming you are willing to listen to math. Goto the new york times rent vs buy calculator and plug in the numbers: http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html Firstly, if you do what you say you want to do buy the house all cash and live there for 4 years, it would be the equivalent of paying 1151 / month in rent once you factor in transaction costs, taxes, opportunity costs, etc. Take a look at the calculator, it's very detailed. This is why you should never buy houses all cash (unless its a negotiating tactic in a hot market, and even then you should refi after). Mortgage rates are super low right now, all that money sitting in the house is appreciating at maybe the rate of inflation (assuming the house value isn't going down which it can very easily do if you don't maintain it, another cost you need to factor in). Instead, you could be invested in the stock market getting 8%, the lost opportunity cost there is huge. I'm not even considering your suggestion that you hang onto the house after you move out in 4 years. That's a terrible idea. Investment properties should be at a maximum value of 10x the yearly rent. I wouldn't pay more then 72K for a house / apartment that rents for only 600 / month (and even then I would look for a better deal, which you can find if you time things right). Don't believe me? Just do the numbers. Renting your 200K house for 600 / month is 7200 / year. Figure you'll need to spend 1% / year (I'm being optimistic here) on maintanence / vacancy (and I'm not even considering your time dealing with tenants). Plus another 1% or so on property tax. That's 4K / year, so your total profit is 3200 which is a return of only 1.6% on your 200K. You can get 1% in an ally savings account for comparison. Really you are much better off investing in a diversified portfolio. You only need 6 months living expenses in cash, so unless your family is ridicuouly wealthy (In which case you should be asking your financial planner what to do and not stack exchange), I have no idea why your parents have 200K sitting around in a savings account earning 0. Open a vanguard account for them and put that money in VTI and your family will be much better off 5 years from now then if you buy that money pit (err house). If risk is a concern, diversify more. I have some money invested with a robo advisor. They do charge a small fee, but it's set it and forget it with auto diversification and tax loss harvesting.  Bottom line is, get that money invested in something, having it sitting in a bank account earning 0 is probably the second worst thing you could do with next to buying this house. IRA and 401k are investment accounts. 401k accounts may be limited in what you're allowed to invest in more than the IRA, but still - these are investment accounts. The money you deposit in them - is invested, per your instructions.  What happens to it is up to you. When you leave your job, if you have some unvested match balance in the 401k, it may be refunded back to your employer, but your own contributions are always vested. The product you seek is called a fixed immediate annuity.  You also want to be clear it's inflation adjusted. In the US, the standard fixed annuity for a 40year old male (this is the lowest age I find on the site I use) has a 4.6% return. $6000/ yr means one would pay about $130,000 for this. The cost to include the inflation adder is about 50%, from what I recall. So close to $200,000.  This is an insurance product, by the way, and you need to contact a local provider to get a better quote. Not sure if you mean that your SO stands to inherit $18 million or has inherited it already.  I would hope that her family already has a team of financial advisors at that point.   The name of the game at that asset level is protection.  You have enough money so you want to keep up with inflation and generate some income.  Most of my firm's clients at that size have at least 50% in tax-free municipal bonds the other half is about 10% in aggressive investments (private equity, aggressive stock managers), and 25% in conservative stock investments, 5% in international investments, and 10% in alternative investments (long/short, GTAA, hedged equity) .  They also tend to have quite a bit of income producing real estate.   Make sure you meet with a financial advisory firm the specializes in high net worth clients.  I work for an independent RIA so I may be biased towards independent and fee-only firms but it seems like the best arrangement.  You pay a percentage of assets under management and get objective investment advice with no commissions.  For $18 mil anything over .50% as an advisory fee is a ripoff.  You all in investment cost should be less than 0.90%.   Also you should look into a high net worth insurance broker.  You current insurance salesman will be in way over his head.    Feel free to PM me with specific questions.  Also, if you want to hire my firm that would be great haha! There is no such animal. If you are looking to give up FDIC protection, investing in a short-term, high quality bond fund or a tax-free bond fund with short durations is a good way to balance safety vs. return. Make sure you buy funds -- buying individual bonds isn't appropriate for folks without a high net worth. Another option is savings bonds, but the yields on these is awful today. If you plan to continue contributing to a 401(k) and are no longer self-employed, then you need to start a new 401(k) at your new business.  You can't contribute to the old one any more.  About the money in the old one, you have a few options.   If both 401(k) plans have good investment options and low fees, then there's little reason to think one of these strategies is better than the other.  If, like me, at least one of your 401(k) providers has very few available funds and those funds have high expense ratios, then it's a good idea to move your money where the investments are best.  As a rule, IRA's are better than 401(k) plans because most IRA's will allow you to invest in practically anything you want while most 401(k) plans only allow you to invest in the funds that have taken your company's HR people to the best lobster dinners or went to the same school as them.  Most organizations do an absolutely horrible job at selecting a reasonable set of funds because the decision-makers generally have no finance background and no incentive to do a good job.  For that reason I like IRA's.   Of course, some solo 401(k) plans are also very good so just leaving it where it is may be best for you.  This has the added advantage of being ready to go if you end up self-employed again at some point.