<prompt> Human: My girlfriend received a settlement for approximately 200k. Her Uncle has it in some mutual funds that arent performing well. She has no clue what to do with it or how to manager it and asked for my help. Weve been together for 5 years, so there is a heavy element of trust. I want to start a Roth IRA and max it out each year using the Vanguard Target Retirement 2050. I want to put a majority in an index fund, so it can be passively managed and have a low expense ration. Finally, I want to have a small cache to have liquidity in case anything should arise. Not sure how much to put in here though. She doesnt really touch the money. The only time she has was to pay for tuition in school and to help her mom out with some credit card issues.How would you grade my plans and what changes, if any, would you make?  <response>: You can max the Roth IRA but that will only be about 5.5k per year at the current limit, and she has to be earning at least that much income to make those contributions. Id recommend putting the money in the following places:1 6-12 month worth of expenses in an emergency fund. Return doesnt matter for this account, its about liquidity.2 Pay off any debt, if she has any. If its below 6 or so, maybe not, thats up to how she feels about clearing debt vs investing.3 Max 2013 IRA contributions, maybe keep 5.5k more on hand for January of 2014 to max that year.3 Open a taxable investment account with Vanguard and put the remaining money there in a TR fund. You can optimize further here if she has a 401k, but that gets into planning out asset allocation and holding tax-efficient funds in the taxable account. Since that may be a bit much right now, a TR fund is a perfectly fine option.Also, she should be careful about paying for other peoples debt, even family, as it will make her the next stop for any debt collectors if things go south. By paying, shes making herself responsible for that debt. 