Money Magazine‘s Walter Updegrave tackles the question of how to handle a windfall in the column What to do with a million bucks.
Updegrave recommends staying away from complicated and costly investing schemes and sticking with low cost ETFs. Specifically, he recommends tax-managed funds such as municipal bond funds.
The PowerShares VRDO Tax-Free Weekly Portfolio (PVI) invests at least 90% of its total assets in a pool of tax-exempt Variable Rate Demand Obligations (VRDO) issued by municipalities in the United States. The most recent 12 month yield is 2.27%.
The SPDR Barclays Capital Municipal Bond ETF (TFI) invests in U.S. long term tax-exempt bonds and carries an expense ratio of 0.20%.
For more ETF investing choices, see the tax-exempt ETF directory.