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Old 02-13-2012, 04:44 PM   #1
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Investment Advice

I am retiring soon. We will be recieving max social security for two peopel age 65. We will have cash to invest of $1.4 mil. I would like to realize as much income as possible with minimun risk. Monies are currently in a NJ Tax Exempt Muni Fund.I have ideas of my own and some "professional" advice,but would like to hear what others in this forum advise.
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Old 02-13-2012, 04:47 PM   #2
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Which risks would you like to minimize? Inflation? Interest rate? Market value fluctuations? The risk of running out of money before you run out oof life? The avoidance of many of these risks are either mutually exclusive or extremely expensive to hedge.
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Old 02-13-2012, 05:22 PM   #3
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I am retiring soon. We will be recieving max social security for two peopel age 65. We will have cash to invest of $1.4 mil. I would like to realize as much income as possible with minimun risk. Monies are currently in a NJ Tax Exempt Muni Fund.I have ideas of my own and some "professional" advice,but would like to hear what others in this forum advise.
Seems everyone has this same question. Minimum risk, invest in government insured CD's. More return, invest in equities.

Talk to professional's, they will say, allocate, diversify, buy foreign, annuities,
watch out for inflation, don't worry your a long time investor, (did your professional's clients do well the past 10 yrs.).

Read other posts on this site. There is no easy answer. Interest rates have been down for a very long time. The U.S. Gov't. want's to keep rates low to get the housing market moving, unemployment up. See Bernanke speeches.

Again, maximum safety, means CD's with low returns. Buy long term CD's with early withdrawal penalties that are not to bad.
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Old 02-13-2012, 06:36 PM   #4
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Old 02-13-2012, 07:47 PM   #5
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Minimum risk is investing in CDs and other Treasuries. But in the end that may open you up to the highest risk: Running out of money.

I've been interested in creating buckets when we retire: the first 2-3 years are in CDs, the next 5-7 years are in intermediate risk; further out than that is invested in the stock market. To me it makes the most sense, esp. if we retire in our late 50s as planned.

Some bookmarks I'd saved:

A Strategy for a Lifetime of Income
Details of your buckets

Morningstar also had a webinar recently from Christine Benz on buckets and the PDF slideshow is online if you are a Premium member.
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Old 02-13-2012, 07:56 PM   #6
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Having lurked here for a few months you will receive some good advice. I would also visit the bogelheads forum. Many of the same people post on both boards, they very thoughtful with their feedback.

Bogleheads • Index page

Best of luck. You will have to provide a lot more information such as what is your budget, what do you need in a year in the way of income, etc.
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Old 02-14-2012, 12:22 AM   #7
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have ideas of my own and some "professional" advice ..
What are they and why?
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Old 02-14-2012, 05:40 AM   #8
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Best of luck. You will have to provide a lot more information such as what is your budget, what do you need in a year in the way of income, etc.
I would consider looking at the situation from a different perspective, what income do you need and what risk would you need to take to achieve that income. This is a big change in how to look at the problem, all my life my investment thesis has been how can I get more $$ for the old pile. Now the problem is how can I turn that pile into an income stream with least risk.

Investments are all about a ballance of risk and return. Safest is under the mattress with a good security system, but no return there. Unless your kinda kinky and like woopie with the $$ On the other end is lots of risk but no safety. Put it all on the tables in Vegas kinda thing.

So the question I face is where do I want or need to be on the line between the safe and the gambling. On a scale of 1-10, if a 4 would meet my income needs, perhaps I can stretch to a 5 or 6. If I have a backup method of paying for essentials, (Pension, annuity) then I can move up the risk curve and perhaps have more wants. But I always have to remember there are no do-overs at 75 if my investments go bad. So I need some safe and some less safe.

The buckets that PaddyMac mentions is one way to look at the problem. Put some safe investments for the next few years, and some in riskier but higher return investments. Then each year or so, move some of the risky to fill up needs buckets that were emptied by spending this year.

Just my thoughts...I'm a long way from figuring this out, like I said for me it is a whole new way to look at my investments. Takes a while for me to get stuff like this into my head and merge it with other plans, ideas, goals.
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Old 02-14-2012, 11:05 AM   #9
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I would consider looking at the situation from a different perspective, what income do you need and what risk would you need to take to achieve that income. This is a big change in how to look at the problem, all my life my investment thesis has been how can I get more $$ for the old pile.
+1, on both statements IMHO.
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