Mutual funds are perhaps the safest investment vehicle for an average person who doesn't want to spend the required time to investigate the individual stocks. The primary advice I would offer regarding mutual funds is the following;
1) Stay with NO-LOAD funds. Why pay when there are lots of funds to chose from that perform well without robbing you when you put your money in or take it out.
2) Buy the funds direct. Again, why pay commission fees to buy something a quick phone call can get you for nothing.
3) Buy funds that match your lifestyle and way of thinking. If you are a conservative person who just don't care for risk, stay with the growth (& income) funds. Avoid the Biotech, overseas and emerging funds unless you have a stomach to accept both risk and possibility of your investment going to zero.
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For those who are looking at "Covered" put & call options, again, be prepared to investigate the stocks you are looking at. Having a "Covered" option means you have to OWN the stock you are selling the option on. For those who do not quiet understand, perhaps the following will help;
1) Put Option - This allows you to sell the right to somebody to sell a stock to you for a preset amount of money. To have it covered means you have set aside enough funds to cover the total cost of the purchase should the Put be excercised. Otherwise, you will find yourself in a huge world of hurt. Upside is, if the stock continues to rise in value, nobody will excercise the right because who wants to sell a stock for less then it's worth? Downside is, if a stock takes a dive, you might find yourself paying $50 for a stock worth only $2 !!!
2) Call Option - This allows you to sell the right to somebody to purchase stock from you for a preset value. A covered Call means you currently own the stock you are selling the Call on. This is perhaps the safest and most profitable investment vehicle one could use to exceed an annuall 10% return on investment (or more). The upside is, if the stock stays below set value until the option expires, you get to pocket free cash. The great part is, you can keep doing this each time the option expires and is not excercised. Also, if you sold the option for $5 a share and the option is at $20, you still get the $20 plus you KEEP the $5 as an added bonus (making the stock worth $25 to you). Downside is, if the stock skyrockets to $100 a share and you sold the rights for only $50, you lose out on the huge jump. Side note: this very seldom to almost never happens to such an extreme, however, stocks can move enough to force the option to be excercised.
3) Excercised - This is the process of option owner buying (call) or selling (put) the stock at the preset price. Also, options expire 3 months after they are wrote. This means, you have to maintain the funds or stock for no less then 3 months. There are other options that last longer, but those are typically done by large investment companies and I suggest that you do not tie-up your funds for that length of time.
4) Options - A single option is equal to 100 shares of stock. You can NOT sell a fraction of an option. If you do not have 100 shares of stock, do not plan on using options. Also, stocks are typically bought and sold in lots of 100 (or divisable by 100). Odd lots generally are expensive and most brokers will not cut you any discounts for buying odd size lots.
5) Covered - This means you have either the stock (for calls) or cash (for puts) to cover the total value of the option.
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When it comes to the stock market, due dilegence is required. If you fail to do the research, do not expect to keep your investment. The stock market is NOT like the lottery. Most stock downfalls are preanticipated. If you heard it on the news, the stock market has already reacted. Getting in on the tail in of a rush will only end up costing you money instead of making you money. For those who are looking for the safest individual stocks, my suggestion has always been this to my friends. Go to your pantry and open it up. Look at the brand names you see in there. Sure, McCormick may be a dull investment, but it's one that has consistently grown an average of 5% plus per year with little to no drops. IBM on the other hand is currently worth $78 to $79 a share. Sad part is, those investors who had this same stock in 1993 would actually be showing a LOSS because around that year, the stock went as high as $115 a share. The stock has NEVER split or given anything more then about a 2% dividend to the investor. For me, 2% just is not worth considering.
For those of you who are safety concious, look for growth stocks that also pay dividends. Utility companies fit this bill very well, but they also tend to drop in value around the spring time and rise in the winter, unless it was a warm winter.
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Now, to answer the orginal question as to how I would invest the money. First, the win would have to be over $500,000 for this to apply. Anything less would go towards bills and home repairs.
This investment idea is based upon an after-tax win of no less then $1 million. I would set-aside 10% for various charities. Another 20% would be set-aside to pay off the bills and do home improvements. I would invest 60% into growth and income stocks. These stocks would have to pay out a dividend of as much as 2.5% and show an average annual growth of 7.5% (and yes, there are many that fit this bill). Stocks typically pay the dividend quarterly, so I would spread the monies across a minimum of 3 stocks to insure dividend income for each month. The remaining 10% would be used for trading stock options and dabbling in higher risk investments that offer huge rewards (anything over 50% return on investment). And uhmm, yes, I have spent many years fine tuning this day dream so that one day, I will make it a reality, with or without a lottery win.
Sir Metro
ttaL 
