Advice in small doses

Last night my bf and I were talking about the money he's about to come into. Obviously he has alot of opportunities with this money. I'll share his sentiments here only because this blog is anonymous.

In our discussion, he said that there are alot of unknowns--taxes, penalties, and so forth. For example, do 401K's pass onto their owner's loved ones without penalties? Obviously, taxes must be paid...but what else? how does that work? What about investments in funds and stocks? Their lawyer is going to be very busy.

So, once all that is cleared up, where should he put the money? He mentioned to me that he felt that stocks were unsafe with all of their ups and downs. This is surprising to me since he is such a risk-taker in real-life. On the other hand, it may just be that he doesn't know a whole lot about his options. I don't think he's ever had excess money.

Other than spending it, he seems to want to put the bulk of the money in a high-yield savings account. The idea of 100K in a savings account pretty much freaked me out. I calmly told him that after taxes and inflation, keeping money in a savings account basically only keeps up the value in the long run--not much growing is going on there. The reason to put money in a high yield savings account is for emergencies.

The fact remains that the only REAL way to make money over a long period of time (that I've heard of, and barring investing in a great piece of property to sell later) is through the stock market.

He also mentioned moving to a lower COL area and buying a house, because that brings more value to your investment. Barring the wonderfullousness and freedom of owning your own house, in the interest of pure money-making, I had a few comments. I mentioned that the real estate market is so volatile right now, and no one property will most likely gain as much as he's looking to gain, and that if he REALLY wanted to make money through real estate, the only way to make money almost for sure is through REITs. REITs can average the market out and also you can choose to invest in business real estate, which tends to be a bit more stable.

So I hope I made valid points and made him think a little bit. Please let me know if you had anything to add.