Dave Ramsey says: Mutual fund is good option for one-time investment

Dear Dave,

What is your advice when it comes to investing a one-time, lump sum of $4,000 for a long period of time?

I recently received an inheritance from an uncle who passed away, and I want to make the money work for me.

I’m 33 and my home is paid for, plus I have no debt and an emergency fund of six months of expenses. I am also maxing out my 401(k) at work.

Thank you for your advice.

— Pat

Dear Pat,

I’m sorry to hear about your uncle, but I’m sure he was proud of the responsible young man you’ve become.

You’ve made some very mature decisions where your finances are concerned, and as a result you’re at a great spot in life.

When it comes to investing, I consider a “long period of time” to be 10 years or more.

If this is the case with you, I’d suggest a good mutual fund with a solid track record of between 15 and 20 years.

I know some folks like to take chances and play single stocks on a one-time investment like this, but I don’t think that’s a good idea.

Single stocks just don’t consistently generate the kinds of returns a good mutual fund will over time.

— Dave

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