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I'm in over my head
Old 09-15-2005, 12:52 PM   #1
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I'm in over my head

So .. Recently I started dipping my toes in the investing area, started with the advisor that runs the company 401k whom I've known for 8 years now and has guided me successfully in that account.*

I have an investment I bought about 5 years ago that I was just made an offer on.* I could clear over a million on this investment after taxes.* WTH do I do now?* *I've been reading here for a few months so I know that I could live off that amount along with DH's* SSI very comfortably so I'll probably RE once I get over the shock.* Any suggestions on what to do with that kind of windfall?* I trust this advisor but I don't want to give him the whole thing, I'd prefer some thing with lower fees.

DH is 63 and I'm 51 - no kids at home.
No mortgage or any other debt except everyday living expenses and taxes.* Health ins would be a factor but only for me after he turns 65.* We have about $250,000 between saving, CDs and our combined 401ks.* I know ER is totally doable I'm just petrified I'm going to make some kind of investment mistake and have to go back to work.
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Re: I'm in over my head
Old 09-15-2005, 01:05 PM   #2
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Re: I'm in over my head

First, I would nail down the sale. After you get the cash, go buy a 90 or 180 day t-bill and don't let anyone convince you otherwise. You will need time to think about what you want to do with your time in retirement, and you will need to decide how to invest the money long term. You will also be going through a big change, so it won't be a good time to make financial decisions.

Personally, I would not let the advisor touch it. You can do the investing yourself very cheaply. A portfolio of 65% VWELX, 15% EFA and 10% PCRIX is probably all you'd need, and maintenance would be an annual withdrawal and rebalancing once a year.
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Re: I'm in over my head
Old 09-15-2005, 02:15 PM   #3
 
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Re: I'm in over my head

That's great advice from Brewer. I'd also avoid any advisor -- if he gets 1% to 4% thats 10,000 to 40,000 dollars! That's an investment mistake you can easily avoid.
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Re: I'm in over my head
Old 09-15-2005, 02:37 PM   #4
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Re: I'm in over my head

Brewer:

I think I'll send you to addition school

However that's probably a pretty good allocation.

Personally I would put 50 percent in a balanced fund, 50 percent in an income fund, and the other 50 percent I would split between a foreign fund and a real Estate Investment fund
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Re: I'm in over my head
Old 09-15-2005, 03:00 PM   #5
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Re: I'm in over my head

Quote:
Originally Posted by MasterBlaster
Brewer:

I think I'll send you to addition school

However that's probably a pretty good allocation.

Personally I would put 50 percent in a balanced fund, 50 percent in an income fund, and the other 50 percent I would split between a foreign fund and a real Estate Investment fund
Heheh, you got me. Whatt I meant was 75/15/10, of course. Should be a low volatility portfolio that throws off a reasonable amount of income and has some good inflation protection.
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Re: I'm in over my head
Old 09-15-2005, 03:21 PM   #6
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Re: I'm in over my head

Quote:
Originally Posted by brewer12345
Heheh, you got me. Whatt I meant was 75/15/10, of course. Should be a low volatility portfolio that throws off a reasonable amount of income and has some good inflation protection.
Oh, C-mon brewer
I was expecting that you, as a Robber-Baron-In-Training would weasel out of it, maybe by saying that you meant to keep 10% in cash or something like this

Outtahere - IMHO brewer gave you a good advice, I would do only one thing slightly different - park the money in a high yield Money Market account instead of T-bills - easier to get to when you finally decide what you want to do with your money.
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Re: I'm in over my head
Old 09-15-2005, 03:23 PM   #7
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Re: I'm in over my head

sailor, I sugested t bills for a reason. Specifically, it would force you to spend time thinking things through and wait for maturity. That way you don't do something on impulse when you are worked up about retiring, life changes, etc. With a MM account it would be too easy to rush in.
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Re: I'm in over my head
Old 09-16-2005, 05:52 AM   #8
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Re: I'm in over my head

Thanks for the suggestions. I'm pretty good about not touching money once it's in the bank so a MM might be fine or if I could find a short term CD. I know I'm getting ahead of things cuz the sale isn't even started yet but I'm one of those ppl that likes to have all the information and plan things out before hand. That way if and when it does happen I'll have all my ducks in row and I won't be freaked out about having a hunk of money like that. I won't need to access it right away cuz I'll probably work for another year training my replacement and then consult until that person has picked my brain clean LOL.
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Re: I'm in over my head
Old 09-16-2005, 07:09 AM   #9
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Re: I'm in over my head

Just a suggestion:

I would not put the money in a bank account or CD. You would be way over the FDIC limit. Bank failures are unlikely, but why take the risk? Buy a t-bill or put the money in a money market mutual fund (not a bank "money market" account).
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Re: I'm in over my head
Old 09-16-2005, 09:15 AM   #10
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Re: I'm in over my head

I didn't think about the FCID secured. I don't know much about T-bills.. can you point me in the right direction for information on them? Or can I find that info at Treasury Direct?
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Re: I'm in over my head
Old 09-16-2005, 10:25 AM   #11
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Re: I'm in over my head

Quote:
Originally Posted by Outtahere
I don't know much about T-bills.. can you point me in the right direction for information on them?* Or can I find that info at Treasury Direct?
Yep-- try this link.
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Re: I'm in over my head
Old 09-16-2005, 01:04 PM   #12
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Re: I'm in over my head

Treasury direct is at the link Nords provided. These are short term notes the US govt issued. About the lowest principal risk instrument on the face of the earth.
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Re: I'm in over my head
Old 09-16-2005, 06:52 PM   #13
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Re: I'm in over my head

Quote:
Originally Posted by brewer12345
Treasury direct is at the link Nords provided. These are short term notes the US govt issued. About the lowest principal risk instrument on the face of the earth.
I was looking at the recent auctions on Treasury Direct and they have a table there which lists "Discount Rate %" and "Investment Rate %". What's the difference between the two? I'm assuming that the DR is the rate and the IR is the yield?

Thanks.
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Re: I'm in over my head
Old 09-19-2005, 06:13 AM   #14
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Re: I'm in over my head

You got it. T-bills are sold at a discount to face (i.e. no coupon payments), so you are effectively buying a very short term treasury zero.
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