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If you had 100K, where would you invest?
Old 03-04-2011, 10:30 PM   #1
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If you had 100K, where would you invest?

Would like some insights about addtional investment ideas: let's say I am ER and have a well balanced portfolio of stock/bond/cash etc based on my age. In addtion, I have some rental properties that generates about 1/4 of my ER income already. Now if I had addtional 100K cash, where should I invest in? It would be nice if it can generate income stream during my ER years - assume some moderate risks can be involved and look for 10 yrs horizon to hold the investment.
Thoughts and ideas?
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Old 03-04-2011, 11:59 PM   #2
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As an all individual equity investor, I would recommend a few nice income stocks - perhaps ABT, KO, MSFT, PG, WMT. This would generate about $3k/year initially, which would probably grow about 8-10% per year.

This assumes, of course, that you would be willing to accept the risks associated with a higher equity allocation.
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Old 03-05-2011, 12:12 AM   #3
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Invest it according to your current stock:bond:cash allocation unless you have some particular expenditure you are planning in 10 years.

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Old 03-05-2011, 12:37 AM   #4
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Invest it according to your current stock:bond:cash allocation unless you have some particular expenditure you are planning in 10 years.

DD
+1

I'd do this too. You have made a financial plan with a particular asset allocation. If $100,000 drops in your lap, I don't understand why that would cause you to change your asset allocation. Also, if you want this solely to provide income during your ER years, I don't see why it would have a time horizon of ten years.
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Old 03-05-2011, 04:19 AM   #5
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MSFT is an income stock? Who says? Money Magazine?
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Old 03-05-2011, 06:05 AM   #6
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MSFT is an income stock? Who says? Money Magazine?
I recently added MSFT to the short (30 or so) list of stocks I track, all of which I consider high quality stocks with decent income and dividend growth (6-10%) expected for the future. MSFT has been paying for 7+ years now, and the most recent dividend increase has convinced me of their intention to continue. Their current 2.4% yield is only slightly below the average of the stocks I track and invest in, compensated for by their expected EPS growth of 10%, on the higher end of the stocks I track.
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Since you are going to retire in 2011--
Old 03-05-2011, 08:19 AM   #7
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Since you are going to retire in 2011--

I would want to make 6-8% return on my money. Therefore, I would divide $100K into 15-20 good dividend paying stocks and monitor them closely. There is no point in taking risk with 2.5% dividend, like MSFT which hasn't appreciated much in last 5 years. I would rather invest in higher dividend paying stocks, some examples being----
NLY (14% div)
PFF (7%)
KMP (6%)
PSEC (10%)
RCS (8%)
AGNC (18.9%)
Of course some of these are very risky, but so is MSFT. Compare it with AAPL which has no dividend. However, at my age I want continuous income, therefore no AAPL or MSFT.
If you have some of your favorite dividend stocks, please write about them.
Thanks
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Old 03-05-2011, 09:30 AM   #8
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I trade/hold MO, AWF, FE, DPL, AEE, DUK, T, FRO, CINF, AFG, NLY to capture dividends with a sprinkle of covered options in my fixed income assets.
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Old 03-05-2011, 01:30 PM   #9
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Originally Posted by CyclingInvestor View Post
I recently added MSFT to the short (30 or so) list of stocks I track, all of which I consider high quality stocks with decent income and dividend growth (6-10%) expected for the future. MSFT has been paying for 7+ years now, and the most recent dividend increase has convinced me of their intention to continue. Their current 2.4% yield is only slightly below the average of the stocks I track and invest in, compensated for by their expected EPS growth of 10%, on the higher end of the stocks I track.
Another stock you mention has clearly entered into the high quality income stock category-WMT. Their recent whopper dividend increase and their excellent record of steady, hefty increases I believe make it a core holding. US same store sales have been flat to down, but that seems likely to be a temporary blip. I am also looking at MCD, but likely I will look for a broad market pullback before going in.

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Old 03-05-2011, 04:14 PM   #10
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Yes WMT dividend increase of 21% was jaw dropping number for such a behemoth.
It has turned me into a believer is my next purchase just waiting for the price to go below $50.

A ~100K (not a recommendation) investment in WalMart or 2,000 shares would have seen a $480 boost in annual income, which covers the inflation increase for the $40K withdrawal over the last year.

I'd also point out that although US growth has slowed they still have huge opportunities oversees. I think one of America's under appreciated strengths is our logistical strength and skill. This means that as a country we are able to distributed goods from a manufacturer to a consumer very cheaply, with minimal payments to the middleman. UPS, Fed Ex, and the US military are all great logistics organization, but from what I understand nobody is better at than Walmart.

The interesting implication is that as the Chinese domestic market expands, WMT should be a pretty big beneficiary. Even if WalMart is selling a product that is designed and manufactured in China and sold to a Chinese consumer, the shareholders of WMT benefit from profit in each transaction. I find this to be encouraging as American wondering how we will compete with China.
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Old 03-05-2011, 04:46 PM   #11
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Anything I invest in, I would use something like 100 day moving average to decide when to get in and out. But to answer the question, I would invest 1/3 in GABUX, 1/3 in PCEF, and 1/3 in TEGBX.
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