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micha8st t1_iuer3u8 wrote

Where is this money now? How has it been invested?

Why do you think you need to change anything?

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AMDGandalf OP t1_iuet63t wrote

The money is sitting in a checking account. It came from the sale of a house.

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micha8st t1_iueunq5 wrote

Gotcha.

Why you and not any of your siblings?

The wiki has some very good suggestions as to how to invest. Investing a trust is no different than investing a 401k or investing an IRA.

I suggest talking with Mom, and talking with the other trust beneficiaries...just to get their ideas.

There's no hurry to invest though. Let the money sit in the bank for a while. Probably a better interest rate than a checking account.

It was a bunch of years ago that we got a windfall. We ended up putting a bunch of the cash into CDs for just a little while - while we decided what to do. Not sure I'd recommend CDs today, but maybe that's not a bad place to start.

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AMDGandalf OP t1_iuf2ou2 wrote

I was made trusee because I'm sort of "the responsible one" among my siblings. I'm not sure any of other my siblings could be trusted to learn how to invest it responsibly or to distribute it prudently/equitably.

I've actually already been sitting on this for a little bit, so I'm ready to learn what I need to in order to invest it.

The wiki did indeed have some helpful advice, which is how I settled on index funds, but it's left me with the above questions regarding the differences between ETFs, index funds, mutual funds, etc...

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micha8st t1_iuf8rry wrote

Okay. There are really two choices here, not 3.

  • Mutual Funds
  • Exchange-Traded funds

The two are the same, except for how they're bought/sold.

  • Mutual Funds are bought by the dollar, based on a price calculated based on the value of all the components shortly after close of market.
  • Exchange Traded funds are bought by the share, and are traded like stock. In theory you can snag a lower price by using stock trading techniques. But you can only buy in units of shares... So If the ETF is trading at 151.66 and you have 200,000 to invest, then you can buy 1318 shares of the ETF, leaving behind $111.88.

Index funds are just a sub-speciality of Mutual Funds (or, frankly, of ETFs)

Funds can be:

  • actively managed.
    They hire smart people to research and watch and choose what to invest in. The manager might have heard of supply issues on Apple's part, and might be seeing that Toro's weed-eaters are selling extraordinarily well...and adjust their buying plans to match. But with that expertise comes extra cost. Expense ratios tend to be higher, and there's "loads" which are nothing more than trading fees.
  • indexed.
    These follow a pre-defined index, like the "Dow Industrials" or the S&P 500. But there's lots of different indexes out there. The advantage is that it's cheap and easy for the manager to manage. You put your 200,000 in, the index tells them exactly how much of Apple, how much of BP, and how much of Toro to buy.

Both can be indexed.

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