• Michael DiBartolomeo

Investing 500k

Investing a half-million dollars isn't something most people consider doing in their lifetime. Nonetheless, an individual might find themselves in this amazing predicament where they're looking to invest such a large amount of money. With that being said, one of the most crucial factors that need to be considered when investing any amount of funds, especially when that is to invest 500,000 dollars, is to ensure this money is being diversified properly. Due to this, a professional financial advisor is always highly recommended as these services are invaluable. With that being said, this comprehensive guide has been prepared to help individuals better their understanding of how they can efficiently invest 500,000 and make it a worthwhile investment. Continue reading to find out more. Visit or contact a personal financial advisor for advice on how to invest 200k or how to invest 10 million dollars as well.


Places to invest 500k

What is the Best Way to Invest 500,000 Dollars?


The best investment method when it comes to investing 500k is largely dependent on the benefits a person wishes to reap from this investment. Nonetheless, there's no doubt that some investment methods are better than others. For this reason, investing experts have put together a list of the most popular and economically beneficial investing methods to help individuals make an educated and well-informed decision when it comes to how they would like to invest their 500K. Here are some of the most well-liked investing options:


High-Interest Savings Account

This might seem like the most boring investment option, but it's something all investors need to consider when it comes to investing large sums of money. This is especially the case if the prospective investor doesn't have an emergency fund. If this is the case, a portion of any investment needs to be allocated to savings. With that being said, many financial advisors typically recommend placing approximately six months' worth of expenses in this savings account.


After stating this, individuals can open this savings account with any ordinary brick and mortar banking institution. However, many investors find that they gain much better rates when opening an online high-interest savings account.


Purchasing Individual Stocks

Some investors have a knack for knowing what companies are bound to go big, which pushes them to purchase individual stocks from said businesses. This is one excellent way of investing 500,000 dollars if you have a higher risk tolerance. However, it's highly recommended to only invest in these individual stocks once the prospective investor has done the relevant research and has enough information to make an educated decision when it comes to purchasing a specific company's individual stocks.


*Stock investing includes risks, including fluctuating prices and loss of principal.


Certificates of Deposit

CDs have now started returning to a reasonable interest rate. The functionality behind these certificates of deposit is that individuals deposit their funds for a specific set time. During this time, the individual is guaranteed a certain amount of interest.


These CDs dropped to an astounding interest rate of one percent during the Great Recession. However, since this time, these interest rates of CDs have continued to rise and become more reasonable. Due to this, these CDs now have the reputation of being a more appealing investment for people who are wanting a guaranteed and passive income from investing their 500,000 dollars.

*CD’s are FDIC insured to specific limits and offer a fixed rate of return if held to maturity, whereas investing in securities is subject to market risk including loss of principle


Exchange-Traded Funds

Exchanged Traded Funds are known for being an excellent way of diversifying across various types of stocks. The beauty behind these exchange-traded funds is that this diversifying can take place while only making a single trade.


These ETFs function in a similar way to a mutual fund. The reason behind this is that individuals have the option of buying a massive number of stocks that form part of the fund. In addition to this, ETFs are also equipped to act as a single share of stock, in which individuals can buy a share of this ETF from the stock market. Due to this, a person has the option of buying small pieces of the fund from the exchange. This is in comparison to going through a fund family, which is commonly done when acquiring mutual funds.


*ETF’s trade like stocks, are subject to investment risk, fluctuate in market value and may be traded at prices above or below the ETF’s net asset value (NAV). Upon redemption, the value of fund shares may be worth more or less that their original cost. ETF’s carry additional risks such as not being diversified, possible trading halts, and index tracking errors.


Annuities

It's no secret that annuities have gotten a bad reputation over the past few years. This is mainly because of the various shady salespeople who used the complexity associated with these annuities to their advantage. With that being said, there are many cases where these annuities would be a fantastic choice for a person who has 500,000 dollars they would like to invest.


There are many different options that you can choose when it comes to annuities. However, the basic idea surrounding an annuity is that an individual supplies a lump sum of cash to an insurance company. From here, this insurance company then gives the supplier of this money a guaranteed rate of return on these funds. When a person begins drawing money from this annuity, they receive a fixed income going forward. Many options come with investing in annuities, which is why it's incredibly vital that individuals work with a financial advisor during this process.


*Fixed annuities are long-term investment vehicles designed for retirement purposes. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Guarantees are based on the claims paying ability of the issuing company. Withdrawals made prior to 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply.


The 529 Plan for college savings

The 529 Plan for College Savings

People who have children who aren't yet in college can take advantage of their 500,000 dollars and plan for their children's futures by investing in a 529 savings plan. This allows any money placed in this savings plan to grow tax-free until these children are ready to use the money in college. Every state has its own 529 plan, which means that the benefits vary from each state.


Some states allow individuals to deduct this investment in the 529 Plan from their state tax. Due to this, one piece of advice that many financial advisors give clients is to check the specific state they live in to see if they're entitled to these deductions.


*Prior to investing in a 529 plan investors should consider whether the investors or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition programs. Withdrawals used for qualified expense are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.


Mutual Funds

A mutual fund is another favorite investment option that allows investors to invest in various asset classes. The investor should choice a fund where the funds management objective matches their own investment objective. From here, the investor places the funds in financial assets classes, like fixed income, equities, or other asset classes. Income from this investment is earned from dividends or interest on the asset. These are held in the investor's investment portfolio. This investment is widely known as being an excellent way for an individual to diversify their investment portfolio and holdings instantly. When a person invests in a mutual fund, they are given the ability to invest in as much as 20 to 30 other securities, which helps reap many incredible benefits from a single investment.


*Investing in mutual funds involves risk, including possible loss of principle. Fund value will fluctuate with market conditions and it may not achieve its investment objectives.




Disclosures:


Securities offered through LPL Financial, member FINRA/SIPC. Investment advice offered through Stratos Wealth Partners, LTD., a registered investment advisor. Stratos Wealth Partners, LRD. The Kelley Financial Group, LLC are separate entities from LPL Financial.


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. The content is developed from sources believed to be providing accurate information.


No investment strategy assures a profit or protects against loss.

Investing in mutual funds involves risk, including possible loss of principle. Fund Value will fluctuate with market conditions and it may not achieve its investment objective.


There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.


The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.


Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawal prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax.

A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% penalty tax. Limitations and restrictions may apply.

The prices of small and mid-cap stocks are generally more volatile than large cap stocks.

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.


The market value of corporate bonds will fluctuate, and if the bond is sold prior to maturity, the investors yield may differ from the advertised yield.


Government bonds and Treasury bills are guaranteed by the US government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate or return and fixed principal value.


Municipal bonds are subject to availability and change in price. They are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax free but other state and local taxes may apply. If sold prior to maturity, capital gains tax could apply.


ETFs trade like stocks, are subject to investment risk, fluctuate in market value, and may trade at prices above or below the ETF’s net asset value (NAV). Upon redemption, the value of fund shares may be worth more or less than their original cost. ETFs carry additional risks such as not being diversified, possible trading halts, and index tracking errors.


Stock investing includes risks, including fluctuating prices and loss of principal.


ETF’s trade like stocks, are subject to investment risk, fluctuate in market value and may be traded at prices above or below the ETF’s net asset value (NAV). Upon redemption, the value of fund shares may be worth more or less that their original cost. ETF’s carry additional risks such as not being diversified, possible trading halts, and index tracking errors.


Investing in mutual funds involves risk, including possible loss of principle. Fund value will fluctuate with market conditions and it may not achieve its investment objectives.


Prior to investing in a 529 plan investors should consider whether the investors or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition programs. Withdrawals used for qualified expense are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.


Dividend payments are not guaranteed and may be reduced or eliminated at any time by the company.


Fixed annuities are long-term investment vehicles designed for retirement purposes. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Guarantees are based on the claims paying ability of the issuing company. Withdrawals made prior to 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply.


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