Low Fee Income Generating Investments for a Trust
If your primary goal is no / minimized fees, there are 3 general options, as I see it:  Based on the fact that you want some risk, interest-only investments would not be great. Consider - 2% interest equals only $1,500 annually, and since the trust can only distribute income, that may be limited. Based on the fact that you seem to have some hesitation on risk, and also limited personal time able to govern the trust (which is understandable), I would say keep your investment mix simple. By this I mean, creating a specific portfolio may seem desirable, but could also become a headache and, in my opinion, not desirable for a trust executor.  You didn't get into the personal situation, but I assume you have a family / close connection to a young person, and are executor of a trust set up on someone's death. That not be the case for you, but given that you are asking for advice rather than speaking with those involved, I assume it is similar enough for this to be applicable: you don't want to set yourself up to feel emotionally responsible for taking on too much risk, impacting the trustee(s)'s life negatively. Therefore, investing in a few limited index funds seems to match what you're looking for in terms of risk, reward, and time required. One final consideration - if you want to maximize annual distributions to the trustee(s)'s, consider that you may be best served by seeking high-dividend paying stock (although again, probably don't do this on a stock-by-stock basis unless you can commit the time to fully manage it). Returns in the form of stock increases are good, but they will not immediately provide income that the trust can distribute. If you also wish to grow the corpus of the trust, then stock growth is okay, but if you want to maximize immediate distributions, you need to focus on returns through income (dividends & interest), rather than returns through value increase.
HSAs are very similar to IRAs. Any investment returns grow tax-deferred and once you reach age 59 1/2 65, you can withdraw the funds for any purpose (subject to ordinary income tax), just like a traditional IRA. If you can afford to do so, I would recommend you to pay medical expenses out-of-pocket and let the funds in your HSA accumulate and grow. In general, the best way to allocate your funds is in the following order: Contribute to a 401(k) if your employer matches funds at a substantial rate Pay off high-interest debt (8% of more in current environment in 2011) Contribute to an IRA (traditional or Roth) Contribute to an HSA Contribute to a 401(k) without the benefit of employer matching One advantage of HSAs versus IRAs is that you don't have to have earned income (salary or self-employment income) in order to contribute. If you derive income solely from rents, interest or dividends, you can contribute the maximum amount ($3,050 for individuals in 2011) and get a full deduction from your income (Of course, you will need to maintain a high-deductible health plan in order to qualify). One downside of HSAs is the lack of competitively priced providers. Wells Fargo offers HSAs for free, but only allows you to keep your funds in cash, earning a very measly interest rate, or invest them in rather mediocre and expensive Wells Fargo mutual funds. Vanguard, known for its low-fee investment options, provides HSAs through a partner company, but the account maintenance charges are still quite high. Overall, HSAs are a worthwhile option as part of your investment plan. I wouldn't focus too much on dividends itself; at the end of the day what matters is total gain, because you can convert capital gain into income by selling your assets (they have different tax implications, but generally capital gains tend to be more tax efficient).    I think the more important question is how much volatility you can tolerate. Since your investment horizon is short & your risk tolerance is low (as in if you suddenly get much lower income than you planned from your investment you'll be in trouble), you probably want assets that have low volatility.   To achieve that, I'd consider the following if I were you: tl;dr If I were you I'd just hold a general investment portfolio with a lower risk profile rather than focusing on dividend generating assets. As stated in the comments, Index Funds are the way to go. Stocks have the best return on investment, if you can stomach the volatility, and the diversification index funds bring you is unbeatable, while keeping costs low.  You don't need an Individual Savings Account (UK), 401(k) (US) or similar, though they would be helpful to boost investment performance. These are tax advantaged accounts; without them you will have to pay taxes on your investment gains. However, there's still a lot to gain from investing, specially if the alternative is to place them in the vault or similar. Bear in mind that inflation makes your money shrink in real terms. Even a small interest is better than no interest.  By best I mean that is safe (regulated by the financial authorities, so your money is safe and insured up to a certain amount) and has reasonable fees (keeping costs low is a must in any scenario).  The two main concerns when designing your portfolio are diversification and low TER (Total Expense Ratio). As when we chose broker, our concern is to be as safe as we possibly can (diversification helps with this) and to keep costs at the bare minimum.  Some issues might restrict your election or make others seem better. Depending on the country you live and the one of the fund, you might have to pay more taxes on gains/dividends. e.g. The US keeps some of them if your country doesn't have a special treaty with them. Look for W-8Ben and tax withholding for more information.  Vanguard and Blackrock offer nice index funds. Morningstar might be a good place for gathering information. Don't trust blindly the 'rating'. Some values are 'not rated' and kick ass the 4 star ones. Again: seek low TER. Not a big fan of this point, but I'm bound to mention it. It can be actually helpful for sorting out tax related issues, which might decide the kind of index fund you pick, and if you find this topic somewhat daunting. You start with a good chunk of money, so it might make even more sense in your scenario to hire someone knowledgeable and trustworthy. I hope this helps to get you started. Best of luck. Foreign stocks tend to be more volatile -- higher risk trades off against higher return potential, always. The better reason for having some money in that area is that, as with bonds, it moves out-of-sync with the US markets and once you pick your preferred distribution, maintaining that balance semi-automatically takes advantage of that to improve your return-vs-risk position. I have a few percent of my total investments in an international stock index fund, and a few percent in an international REIT, both being fairly low-fee. (Low fees mean more of the money reaches you, and seems to be one of the better reasons for preferring one fund over another following the same segment of the market.) They're there because the model my investment advisor uses -- and validated with monte-carlo simulation of my specific mix -- shows that keeping them in the mix at this low level is likely to result in a better long-term outcome than if i left them out. No guarantees, but probabilities lean toward this specfic mix doing what i need. I don't pretend to be able to justify that via theory or to explain why these specific ratios work... but I understand enough about the process to trust that they are on (perhaps of many) reasonable solutions to get the best odds given my specific risk tolerance, timeline, and distaste for actively managing my money more than a few times a year. If that. "If you want a Do-It-Yourself solution, look to a Vanguard account with their total market index funds.   There's a lot of research that's been done recently in the financial independence community.  Basically, there's not many money managers who can outperform the market index (either S&P 500 or a total market index).  Actually, no mutual funds have been identified that outperform the market, after fees, consistently.  So there's not much sense in paying someone to earn you less than a low fee index fund could do.  And some of the numbers show that you can actually lose value on your 401k due to high fees. That's where Vanguard comes in.  They offer some of the lowest fees (if not the lowest) and a selection of index funds that will let you balance your portfolio the way you want.  Whether you want to go 100% total stock market index fund or a balance between total stock market index fund and total bond index fund, or a ""lazy 3 fund portfolio"", Vanguard gives you the tools to do it yourself.  Rebalancing would require about an hour every quarter. (Or time span you declare yourself). jlcollinsnh A Simple Path to Wealth is my favorite blog about financial independence.  Also, Warren Buffet recommended that the trustees for his wife's inheritance when he passes invest her trust in one investment.  Vanguard's S&P500 index fund.  The same fund he chose in a 10 year $1M bet vs. hedge fund managers.  (proceeds go to charity).  That was about 9 years ago.  So far, Buffet's S&P500 is beating the hedge funds.  Investopedia Article" "I think you want to look at companies that buy annuities and give you a lump sum.   They exist to do this for lawsuit payments, lottery winnings, etc. I'm not sure what the fees would be on a relatively small payout of $6K but try searching for ""converting annuity to cash"" and the first several hits were all firms looking to buy structured payment settlements for a lump sum. They make their money by paying less than the present-day value of the annuity, so you will get less money this way than collecting your payments slowly." 1: Low fees means: a Total Expense Ratio of less than 0,5%. One detail you may also want to pay attention to whether the fund reinvests returns (Thesaurierender Fonds) which is basically good for investing, but if it's also a foreign-based fund then taxes get complicated, see http://www.finanztip.de/indexfonds-etf/thesaurierende-fonds/ CDs pay less than the going rate so that the banks can earn money. Investing is risky right now due to the inaction of the Fed.  Try your independent life insurance agent. You could get endowment life insurance. It would pay out at age 21. If you decide to invest it yourself try to buy a stable equity fund. My 'bedrock' fund is PGF.  It pays dividends each month and is currently yealding 5.5% per year. Scottrade has a facility to automatically reinvest the dividend each month at no commission.  http://www.marketwatch.com/investing/Fund/PGF?CountryCode=US