I will tell you a personal story, I hope you learn something from it, although I am not recommending you follow it perfectly because every journey is different.
I worked for Westinghouse for 17 years and was successful for most of those. As a department head I got a yearly bonus, out of which I bought myself one toy (big screen TV, lawn tractor, etc.) and deferred the rest. When I moved up to business unit manager I got two bonuses: one for the performance of my unit and one for the overall performance of the company (Westinghouse). I had great influence over the former and virtually none over the latter. I followed the same recipe with both, one toy and the rest in deferred debentures.
Then we got a new CEO who I instantly hated and him me, and after a year of agony I was fired. The company offered three choices to receive the deferred comp: take it all in one lump sum, take it annually at 20% over five years, or take it at 5% per year over 20 years. I discounted the last option (maybe good for someone about to retire, I guess) but couldn’t decide between the first two.
I called a fellow traveler who gave me great advice. He said “If you get it all now you won’t know what to do with it and you’ll screw it up. And the third option is absurd, so do the 2nd AND LEARN. The first year you’ll have a slug; pay yourself a little something and put the rest in the market. Get advice, but also do what you want. By the second year you will have learned a lot, and by the 3rd you’ll know most everything you need to know.”
He was right. That was in 1994, and I had just had a tour of some cubicles at the Chicago Tribune, where they were a part investor in a little outfit called AOL, which hardly anybody had yet heard of. Mrs. Goofy took a stock course and was seduced by the guy into opening an account with Dean Witter. He put a bunch of money into decent, stable stocks: Morton Salt, McDonald’s, Walgreen’s and others and that was fine with me. I took a little slice and bought some AOL (over his objections.)
And after the first year the stocks had done decently, and I learned. And the AOL had shot up and split, and shot up again. So out of the second year’s payout I bought some more, and also some Cisco, and some Lucent, and a few others. Most all of them did well, and the stable stocks were OK too. Third year: repeat. Fourth year: repeat.
In the fifth year I saw that many of the high fliers were too high (I would note a parallel with today) and I cashed out and paid a ton in taxes. On some I made a fortune: AOL and Cisco most notably. On some which had done well for a time I got killed as they cratered (Nortel, Lucent). On a few I got out even. But along the way I had learned a lot, I jettisoned some of the broker’s picks, kept some others, and learned why for each. I am now in a place in my life where my advice would not serve you at all; I am fortunate to be in the spot of “staying rich” rather than trying to “get rich.”
It appears you are about to “be rich”, and from your post I would also say you are perilously close to walking into the casino with your pockets jangling with cash, and unless you know more about the casino you are likely to exit with less, perhaps a lot less. You are an unsophisticated fish in a sea of sharks.
With an inheritance coming you don’t need to “get rich”, but you do need to “get educated.” Newsletter tip sheets and stock market suggestions from shoe shine boys is not the best way to do it, although occasionally you can find a gem there. (I wandered into the AOL cubicles, for instance.) A few hundred dollars in “ideas” from a newsletter? OK. $1.8m in one swell foop in companies you don’t know anything about? Not OK. Slow down. You have a whole life ahead and you are about to pass though an inflection point. Don’t screw it up risking money you shouldn’t risk to achieve something you don’t need.
Lastly, I apologize for the length of this missive, but personal experience is a better teacher than anything, or as I read somewhere else today: “Good education is mostly about experience, and the best education comes from your bad experiences.” Make your first education and first mistakes in baby steps. You’ll thank me later.