Time Horizon

• The first consideration before investing a lump sum of $50,000 is when the money will be needed. Your investment strategy depends on the amount of time you have to build the savings. A short-term investment would range from needing the funds almost immediately to needing them three years in the future. An intermediate time horizon ranges between three and 10 years, and a long-term outlook is considered 10 years or longer.
  
  

Investments for Short-term Needs

• Investors who might use the money within three years should deposit most of it in a money market fund or bank savings account so the funds are readily available. If the money will not be needed for a few years, certificates of deposit or Treasury securities might be appropriate investments. These are safe, risk-free securities that preserve principal while earning some interest. The CDs and Treasuries can be laddered for accessibility in six months, nine months, one year or longer.
  
  

Intermediate and Long Term Investments

• Most of the funds earmarked for use three to 10 years down the road should be placed in relatively safe investments such as individual bonds and bond funds. These might include CDs, Treasuries, government agency bonds and investment grade corporate or municipal bonds and bond funds. A small percentage of the funds can be placed in stock mutual funds if the money will not be needed for at least five years. The best option for most people with long-term investment objectives is an individual retirement account (IRA) or Roth IRA. The funds in both types of accounts grow untaxed. Taxes are paid when the money is withdrawn from an IRA. No taxes are paid on Roth IRA money if the money is withdrawn in accordance with federal tax laws.
  
  

Types of Investments

• Investors with an extra $50,000 to invest, a long-term time horizon and other investments in 401ks, IRAs, real estate or other assets should think about investing the $50,000 in individual stocks or stock mutual funds. The $50,000 can fund a diversified stock portfolio of 10 to 20 stocks. Mutual funds offer diversity and less volatility and risk than individual stocks. An account might include a fund specializing in large blue chip companies, a fund focused on growth or small company stocks and an international fund. A bond fund can be added to lessen portfolio volatility, preserve capital and provide income for reinvestment.