Q&A: Investing a Lump Sum?

Different options bring different types of risk.

Question: If you had a lump sum of $180,000 to play with, how would you invest it? I’m 47 and my wife is 43; she’s working, I’m not. We’re set in every manner I can think of, and we have this lump sum we can play with. We’re looking to possibly go high-risk if need be. If we lost it, it would be annoying but not devastating.

Ric: I’m going to take you at your word that you could truly blow this cash and not care. If we delved into the veracity of your statement, we might find that your claim is not accurate (assertions of this sort rarely are) — but let’s assume for now that it is.

You must understand that just because you take a high risk doesn’t mean you will necessarily get a high return. The only thing that’s certain when taking a high risk is that you get...a high risk.

Here are two ideas for you. One is literally speculation: You make a bet, or a series of bets — say, 10 bets at $18,000 each or one big one of $180,000 — into technology or health care start-ups. Most likely, you’ll lose everything, but there is a chance you’ll invest in the next Twitter or cancer cure and become a billionaire.

The second idea is to engage in “impact investing.” This notion says you can do well by doing good. For example, you might make nano-loans (which are loans of as little as $50) to members of tribal communities in Africa; $50 is enough to help someone in those societies start a business. On a somewhat larger scale, you could engage in angel investing or venture capital, helping budding entrepreneurs build businesses and create jobs in this country.

Both of these ideas have a primary flaw (other than the fact you’ll probably lose all your money): They are very time-consuming. That’s because you must engage in a lot of research to find the right deals.

Still, if you have the time and are truly willing (and able — please let us verify for you that you are), you can proceed.


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