I would not advise under the mattress. Under the mattress the money loses value. Assume the day your friend received the money bought a loaf of bread for $ 400k. The next day the bread company raises the price of the bread to $ 401k. Your friends $ 400k is worth less.
I would also not recommend the friend make an investment in an area with professional involvement. The professionals will beat you every time.
What your friend should invest in should depend on their belief about risk and return. More risk leads to more return. Everyone wants to make as much as possible. Upon investigating different investments and understanding the associated risk, the investor's goals change.
How old is this person?
What's goals are they trying to obtain?
Are they married?
Do they have children and are they dependent?
What's his net worth?
How much does he make?
Is he afraid to take risk (can he lose 50% and not care)?
Is he retired when will he retire?
His tax liabilities?
Does he need liquidity?
These are just a few questions that need to be asked to arrive to an answer. Typically if you're older you want less risk and vise versa. Diversification is the key but some areas have less risk than others. Also, don't actually answer these questions to me because I'm not a financial advisor and will not give investment advice.
If you sold a property, you will owe tax on the gain, you didn't say anything about the putting aside money to pay the tax. So that would be first. Next, consider diversification! some in a CD, some in a biotech mutual fund for growth, some in a growth index (low cost) and some in dividend paying income stocks (like PG, CL, EMR, PH for example),
My recommendation for anyone that doesn't know stocks is to sign up for thestreet's actions alerts. You can buy and sell with professionals that way and it takes your guessing out of it. I do that and I think its been great, if its to expensive then get together with a few people and chip in on it. Thats my recommendation.
Does the investor want to be involved in the "investments" or leave it to the "professionals".
If yes, go to assetbuilders.com and look for Couch Potato Portfolio.
If no, go to Vanguard or Fidelity for one of their 2040 Target Funds (or similar)
Roth IRA
cash
A member at my retirement meeting said he inherited and sold a condo for 400K and will close in a couple weeks but don't know where to put the money. Some said stocks,mutual funds,tax free munis,under the mattress.What advise would you give?
