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Returning Member

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received $75K for equity in home due to divorce.  

Owe $25K for personal loan settlement.

Want to start an account for a child (IRA, trust?)

What is best way to invest without paying high taxes on remaining funds??  How much can I put into personal savings account with out tax  penalties???

2 Replies
Level 14

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There’s no tax liability for putting money into a savings account or an investment.  The type of investment (CD, equity or bond fund, etc.) depends on your overall financial situation and goals. 

Level 3

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I agree with @Bsch4477 completely.  There's no penalty or risk of putting the money into a bank account or conservative mutual fund.  

Sometimes you can reduce taxes on the profits from the investment by putting it in an UTMA account.  You could also look at putting some of it in 529 college saving plan, which avoids all tax on investment earnings.  Another thought is to put it in a Roth IRA.  I think (ask someone who really knows) you can take out any money put into a Roth IRA except for investment earnings without penalty for any reason.  So that would be money for your retirement but also available for the child if you need it.

The taxes in earnings from $50k of investment aren't that much, so don't sweat what type of account.  You could just open a regular non-tax-advantaged account at a mainstream brokerage company like Fidelity or Schwab and have them put it into a conservative mutual fund that invests in stocks and bonds.  Sometimes this type of fund is called an "asset allocation" fund.  They can get you a summary of the types of investments it holds.  A conservative mutual fund will usually invest in major companies like Walmart, Home Depot, Apple, etc.  


If you go to a mainstream bank or investment company and put it in something you understand, you won't go wrong.

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