MW I'm selling my condo and have $130K to invest. Is this a bad time to invest in the S&P 500?
By Quentin Fottrell
'What is the smartest way to create income with this money?'
"I want to use this as an investment to earn money over the next few years." (Photo subject is a model.)
Dear Quentin,
I'm in my 50s and am planning to sell my condo soon, and I will have a lump sum of $130,000 to invest. What is the smartest way to create income with this money? I plan to pay off a small debt. I want to use this as an investment to earn money over the next few years. Is this a good or a bad time to invest in the stock market?
Modest Investor
Related: 'I fear a significant decline in the S&P 500': Do I sell my tech stocks before it's too late?
You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com. The Moneyist regrets he cannot reply to questions individually.
Gold and the stock market have been enjoying simultaneous bull runs, perhaps pointing to conflicted sentiment among investors.
Dear Modest,
Assuming you have another home, this $130,000 is a gift, and it comes at a good time. Always pay off your debt first, because you're losing money on debt above and beyond the current rate of inflation. The sooner you do that, the better. It's good to be free and clear of debt. That opens the way for you to have fun - not a word you often associate with saving and investing - with your windfall.
The market has been on a tear these past months, especially since April, when stocks sank after President Donald Trump made his tariff announcement. (Tariff negotiations are ongoing, with Trump recently saying he came to a mutually satisfactory agreement with China.) Uncertainty over the government shutdown and the resulting dearth of economic data have not helped investor confidence.
Gold and the stock market have been enjoying simultaneous bull runs, perhaps pointing to conflicted sentiment among investors. People typically buy gold as a hedge against uncertainty, and they buy stocks because they have considerable confidence in the economy continuing to drive the market. Currently, investors are facing concerns about interest rates and inflation, amid exuberance in sectors related to artificial intelligence in addition to questions over stretched valuations.
Investors are facing concerns about interest rates and inflation even as they are seeing exuberance in sectors related to AI.
You don't mention IRAs or 401(k)s or index funds. You're in your 50s, which means you could have another 15 years before you retire, so you can afford to put 75% of your money into the S&P 500 SPX. Dollar-cost averaging - investing a fixed amount of money over a period of time - can help you weather short- to medium-term volatility. Diversify your investments with a combination of U.S. and international blue-chip stocks.
Other options include a balanced or dividend growth fund like the Vanguard Wellesley Income Fund VWINX, which invests 60% to 65% of assets in investment-grade fixed-income securities and the rest in dividend-paying common stocks, or the T. Rowe Price Retirement Balanced Fund TRRIX TRRIX, an actively managed fund that invests in a portfolio consisting of around 40% stocks and 60% bonds.
Related: Six cheap stocks of S&P 500 companies expected to grow quickly through 2027
You are in your peak earning years. T. Rowe Price suggests that by the time people are 50, they should have five times their annual salary saved, and by age 55 they should have seven times their salary. Starting at age 50, you can also make catch-up contributions to your retirement funds, to the current limit of $7,500 a year for a 401(k). "Fortunately, there's still time for even modest adjustments to have a large impact down the road," the investment-management company says. "If possible, aim to contribute the maximum amount to your retirement accounts."
"In addition to setting money aside in your retirement accounts, consider saving in a taxable account," T. Rowe Price adds. "Setting aside money in a taxable account can provide you with flexibility for different goals and improve the tax diversification of your retirement savings. If you are already on track in your retirement accounts, maybe your next dollar should not go to a tax-deferred account."
Realistic goals
When you retire, you should have 11 times your annual salary saved, the firm says. "Setting aside 15% of your annual income - including any workplace plan company match - can help you reach that goal, but if that's too difficult right now, start saving what you can and work to increase that amount over time." But remember that these figures are laboratory-born goals and are not always possible to achieve in the real world.
High-quality fixed-income investments and Treasurys tend to perform better as interest rates start to decline from a recent peak. Short-term Treasury bills are suitable if you need to access the money in the near term. Bond prices and interest rates typically have an inverse relationship. Sectors like real estate generally also perform better during a time of lower interest rates and some signs indicate that property may soon offer some upside.
Set aside enough money in an emergency fund to cover at least six to 12 months' worth of expenses. And, yes, because you never know what tomorrow might bring, treat yourself to something: For some people, that might be a long-awaited vacation, while for others it could be solar panels for their home. The rest of this money can help you embark on a journey where, as you say, your money makes money.
Fixed-income investments and sectors like real estate generally perform better during a time of lower rates and may soon offer some upside.
High-yield savings accounts are more liquid than certificates of deposit, meaning you can take your money out more easily, with withdrawals usually limited to half a dozen per month. With CDs, meanwhile, you are committing to a set period of time. But interest rates on high-yield accounts can change based on the Federal Reserve's benchmark rate. When you buy a CD, the rate does not change for the duration of the certificate.
For that reason, CDs often attract people looking for a safe haven for their cash. The rates typically track the federal-funds rate, and you can set up a CD ladder by buying 1-, 2-, 3-, 4- and 5-year certificates, so that you have one maturing every year. With these options, you will have plenty of money to play with safely. But with interest rates heading south, they will soon earn you only a little more than inflation.
Proceed carefully if you are considering an annuity. While they are safer than stocks, the fees can be as much as 10% of the value of your contract. "Typically, the more complex the annuity, the higher the commission," according to Annuity.org. "The commission on a 10-year fixed index annuity ranges from 6% to 8%." That can include commissions, administrative fees, mortality expenses and surrender charges.
And also watch out for early withdrawal fees. If you withdrew $10,000, you could pay 5%, or $500, which applies to the entire annuity withdrawal amount. "If you withdraw $50,000 instead of $20,000, your fee would rise from $1,000 to $2,500," Annuity.org adds. You could face an IRS withdrawal fee if you try to take money from your annuity before you reach age 591/2.
You are in your 50s. This is a good time to invest your money. Your 65-year-old self will be grateful.
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November 07, 2025 14:42 ET (19:42 GMT)
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