How to Invest if You Know Nothing About Investing

Q: I'll try to make my story as short as possible and go right to the question.

My husband and I sold a house, we had about $250,000 then, that was about two years ago. We paid all our debt, and now are debt free, but also spent most of our money. We now have about 40,000 left in the bank and I know that if we don't invest in something quick it will be gone sooner than I think.

We know nothing about stocks, funds, bonds etc... investing in that would be like jumping in a pool without knowing how to swim. Honestly I just don't get it. I don't have the smarts for that. One thing we have is a retirement plan from my husband's work. I don't work, I'm a stay at home mom. I was thinking to contact a financial advisor in the area but I came across your website and here I am looking for advice.

What I would like is to multiply the little bit of money we have now, make it grow a whole lot, the smart way. I just don't know how. What advice can you give us?

A: It sounds like you need to share it with someone and there is a great deal of anonymity this way. The problem is that you really shouldn't invest that money. An investment should have at least a 3-5 year time frame. It doesn't sound like you have that since this money is being tapped.

If this money is invested and then you need it, you increase the chances of losing money instead of gaining.

I would recommend that you don't worry about trying to find an investment and instead put this money into a high interest bearing money market account. Personally, I use an online bank that allows me to easily transfer money back and forth from my checking account.

The main objective is for you to work on either increasing your household income or to reduce your expenses. Unless you are able to live on less than you make there is little chance of improving your financial situation.

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