My mother, age 63 is receiving a $100K life insurance payout. She has no income and little saved for retirement. What should she do with the $100K?

This question and answer originally appeared at Quora.

Firstly, I’m sorry to hear about your family’s loss.

In these times the most sensible thing to do is to take your time.

Don’t make what could be irreversible financial decisions if you aren’t in a clear financial mindset.

Put the money into a few bank accounts on a temporary basis and patiently think about what to do with the money.

I usually favour each person learning about how to invest (as professional advice fees can soon add up), however in this situation, given the amount of money and your mother’s age – you may be best served seeking professional advice in the US.

I’ve heard a few things mentioned from other posts, but the short answer is that no investment or solution is going to be perfect. Each will have it’s unique advantages and disadvantages which you should take the time to fully understand and then decide what fits in with your mother’s own personal needs.

A life annuity, whereby you hand over the cash in return for a insurance company promised lifetime income, has it’s merits. However they have been affected by low interest/bond rates and I feel that generally, your mother will probably be a few years too young (at age 63). The rates will tend to get better with age. You should however use this as a benchmark to aid comparison with other options.

In general, investing into a diversified income producing portfolio (dividend paying shares, commercial property, corporate and government bonds) should provide a reasonable long-term income level, however with the size of the funds you may not be able to financially afford fluctuations in income levels, or the financial stress in market downturns may well be too high (causing paper losses to become very real ones).

It may well be that the best thing to do is find a variety of ‘good’ interest paying bank deposits (I say ‘good’ interest in relative terms – we all know they are pitiful) and adjust expenditure downwards for a few years until a better option becomes available.

I would advocate caution, patience and due diligence at every stage of the process before deciding where to invest this money for your mother.

A reputable financial planner would be happy to discuss these options with both you and your mother present at a meeting. With the size of the fund, some may not be able to help you, but perhaps do a local search and try and speak to a few different financial planners to get an idea.

I have a guide about what to look for in a financial adviser. Whilst it is UK focused, it is a general guide, so you may still find it useful.

Here are a few websites which may help you (but please note that I am not a US based financial planner, so unfortunately I cannot vouch for anybody).

Find a CERTIFIED FINANCIAL PLANNER™ Professional or Advisor | PlannerSearch

Fee-Only Financial Advisors Home

Find a CFP Pro

Feel free to ask me any questions using the Quora messaging service or via HOME – small acorn money. I hope this helps you and I wish you and your mother all the best.

This answer first appeared here.

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Mark Underdown

Financial Coach, Small Acorn Money

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