What to Do With $120,000

On our Investing Beginners discussion board the other day, Fool Community member QEtrailboss posted her first message ever in our community, "desperately seeking advice." She then confessed:

I have had $120,000 sitting in a bank account for longer than I can admit, unable to decide on where to put it. I've just joined the Fools and subscribe to three of the newsletters (Rule Your Retirement, Champion Funds, and Inside Value). I feel like I'm learning a lot and actually got up the nerve to change my allocations of my IRAs and 401(k) (Whew!! that was scary, but I feel good about it) ... but I'm still stuck on where to put this other stash. . I'm 46 and my husband and I have a good amount saved up already, but retiring early sure sounds good!! I appreciate any thoughts -- including how to get off my rear and DO SOMETHING!

She got some good advice.

A fellow community member, theHedgehog, responded:

It's a tough position. Have you gone to the Beginning Investor forum and read through the [frequently asked questions]? Have you read any of the retirement investing books? As many here know, I like How to Retire Early and Live Well with Less Than a Million Dollars by Gillette Edmunds. A lot of people don't like that at all, so it's a matter of preference, I guess.

I have about the same as you do in cash to invest. I have it spread out over the following [exchange-traded funds (ETFs)]:

• iShares MSCI Emerging Markets Index (AMEX: EEM)
• iShares Cohen & Steers Realty Majors (AMEX: ICF)
• iShares Dow Jones U.S. Utilities (AMEX: IDU)
• iShares S&P Europe 350 Index (AMEX: IEV)
• iShares S&P SmallCap 600 Index (AMEX: IJR)

You will notice that this is a fairly aggressive portfolio, so I am not suggesting that you should just do that and go on with your merry life. But considering the cash you have, do consider looking into [ETFs].

I'll interject here that ETFs are indeed well worth considering. Learn much more about them in our ETF Center.

Next, member wcfenton chimed in:

Welcome to the board! Ideally, whatever you decide to invest in should fit into your asset allocation plan. . [Y]ou just need to keep in mind which investments carry the least costs and tax burden and plan accordingly. Along this same line of thinking, I can only pass onto you that which you probably already know, so take it as a reminder. ... (1) Place your most tax-inefficient funds in your 401(k)s, 403(b)s, traditional IRAs, and similar accounts. (2) Next, place your next most tax-inefficient funds in your Roth IRAs. (3) Lastly, place what's left in your taxable accounts. Try to use only tax-efficient funds in taxable accounts.

Then wcfenton offered a list of investments ranked in order of tax efficiency. You can peek at them in his post on our discussion board. (If you're not a member of our Fool Community, I encourage you to try it out for free for 30 days.) He also recommended and explained how to learn more about savings bonds.

Finally, here's a recommendation from me to anyone new to investing: Read our 13 Steps to Investing Foolishly and/or our Investing Basics areas. They can give you a sound platform from which to invest and continue learning about investing.

Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article.