Our experts tell Rob—and anyone else with a chunk of money—how to invest.

So now—after the IRS has taken its hungry bite—Rob has $64,000 of game-show winnings left. That money is currently sitting in a bank savings account, where it earns about 2% interest. Rob could certainly be getting a better return somewhere else. But where? 

For advice on where Rob should invest his windfall, I spoke with two of my favorite financial advisors: Bill Speciale (of David L. Babson & Company in Cambridge, Massachussetts) and Kurt Brouwer (of Brouwer & Janachowski in Tiburon, California).  

Bill and Kurt agree that Rob should spread his money among several different kinds of investments—some very safe, some a little riskier. This strategy, known as diversification, will put Rob in a good position to profit from a stock market boom, while providing him with a safety net if the stock market takes an unexpected tumble.

Here’s how they would divide up Rob’s winnings: 

1. EARN 6% IN MONEY MARKET FUNDS, NOT 2% IN THE BANK. Based on the info that Rob provided about his thriving career (he is on Broadway, after all) our advisors project that he is going to owe a lot more taxes this year than he has in the past. To make sure he has ready cash to pay his tax bill, he should put $25,000 of his winnings into a money market fund.

BILL RECOMMENDS: Vanguard's New York Tax-Exempt Money Market Fund (800-662-7447; www.vanguard.com). Based on Rob’s tax bracket, this fund pays the equivalent of 6%. That sure beats what he could expect from a bank savings account! 

2. HOLD ONTO THOSE VALUE FUNDS. Turns out, our music man is not so naïve about money. Back in the mid-1990s, he put some money into mutual funds. Specifically, Rob invested in two funds offered by a company called Legg Mason: the “Value Trust Fund" and the “Special Investment Trust Fund," both value funds. 

BILL AND KURT RECOMMEND: Keep the Legg Mason funds, but don’t put more into them. (Investors must pay fairly high annual expenses to invest in these two funds, but that hasn’t really hurt returns much in this case, because the funds are doing so well. For more on the importance of expenses, click here). 

3. FIND FUNDS THAT INVEST IN GROWTH STOCKS. People in their twenties and thirties should invest in companies with long-term growth potential, say both planners. So since Rob is already invested in value stocks, he should put the bulk of his new money into growth funds. 

BILL RECOMMENDS: Rob should put $22,000 in Fidelity Growth Company (800-544-6666; www.fidelity.com), which invests in large, growing companies like Intel and Hewlett Packard. Another $10,000 should go into the Firsthand Technology Company (888-883-3863; www.firsthandfunds.com), which is risky but potentially very high-performing. 

KURT RECOMMENDS: Rob should split $32,000 between two core growth-oriented mutual funds: White Oak Growth Stock Fund (888-462-5386; www.oakassociates.com) and Harbor Capital Appreciation Fund (800-422-1050; www.harborfunds.com). If he chooses to invest more later on, Kurt suggests Firsthand (with a cautionary note about its volatility) and Selected American Shares (800-243-1575; www.selectedfunds.com). 

4. PUT A GOOD CHUNK OF YOUR MONEY INTO INTERNATIONAL FUNDS. It’s cliché to say that we’re participants in a global economy. But it’s true. Our advisors recommend putting 5-10% of your total holdings in a mutual fund that invests in international companies. 

BILL AND KURT RECOMMEND: Rob should put the remaining $7,000 of his winnings in an international fund. 

BILL RECOMMENDS: Fidelity Diversified International Fund (800-544-6666; www.fidelity.com). 

KURT RECOMMENDS: Artisan International Fund (800-344-1770; www.artisanfunds.com). 

5. GET SPECIFICS ON MUTUAL FUNDS FROM MORNINGSTAR.COM. Both advisors recommend that Rob check out the details of these funds on this site, which is chock full of more than you would ever want to know about mutual funds. 

How Rob Could Invest

KOBLINER'S LAST WORD:
I’m a firm believer in the virtues of index funds. (For more on index funds see: Begin Investing.) In my opinion, index funds are the simplest and most reliable way to invest in the market. So, you may ask, if index funds are so great, why don’t the planners recommend them for Rob? 

Bill says that his recommendations were built around the fact that Rob already has value funds that he wants to keep. So Bill’s choice of funds is designed to balance out Rob’s existing portfolio. If Rob had no investments at all, Bill says he would have recommended that Rob start with an index fund like the Vanguard 500 Index Fund (800-662-7447; www.vanguard.com), which holds stocks in the S&P 500 Index. The S&P 500 Index contains a mixture of value and growth stocks. 

Kurt, on the other hand, simply believes that the funds he recommends will do better than index funds, especially for someone as young as Rob, who has time to ride out some of the market’s tough patches.

My bottom line: Because Rob is already invested in value funds, it might be a good idea to balance his investments with a growth-oriented index fund, like the Vanguard Growth Index Fund. If he were starting fresh, I would tell him to put most of his money into the Vanguard Total Stock Market Index Fund, which mirrors the performance of the stock market as a whole.