where to invest cash balance

[52andout]

If you were going to get a large cash retirement balance where would you consider putting it? This along with what we have saved is well enough for us to be considered FI with a cushion that enables us to live a nice but not extravagant life.

Scenario: no debt including house. Have done a lot of the big updates on the house last few years (roof, appliances, windows.) Two years of living expenses in CD's in bank. Kids gone, educated and married. Newer paid for cars. Two adults 55 years old. Very marketable skills so can stay in the workforce and get work if needed. I will probably stay doing part time work as a nurse "just in case" the economy remains in the toilet.

This will be almost 50% of our net worth. Current retirement fund allocation approx 40% stocks, 60% bonds. Well diversified as you can be today.

Options I can think of : going to a big house like Vanguard and doing 50:50 allocation no load funds, going to a bank and putting it all in CD's at low interest (but no loss of principle), doing some of each.

I thought we had it all figured out, and actually did well as we had stuck to our asset allocation and as the market rose kept pulling money out. Last year or so has us perplexed and I know no one really knows what will happen next week.

I don't trust annuities- who knows if the companies will be around. Don't want to be a landlord. Have consulted a financial planner but don't have a good feeling, probably because he almost seemed shell shocked with the recent events of the market. I can bet he has been chewed out recently. He really didn't have any advice to change the investments we already had.

Any ideas we haven't thought of? I read here frequently and have learned a lot from everyone's successes and failures. None of us could have imagined the recent past financial fiascos but we can only move on and make the best decisions we can to protect ourselves.

[Koolau]

Some free advice - and worth every penny, of course.

At least two schools of thought.

1. Pick your AA and invest your new stash accordingly.

2. Decide whether you need potential growth (so go with equities) or whether you have enough to live on and don't want to take too big a chance on losing it. If so, stick with e.g., CD ladder - do your research to get best interest rates. Keep in mind if rates go way up in the future, you can "bust" the CDs for a relatively small (90 to 120 day's interest) penalty and reinvest. Alternate to CDs might be TIPS or I-bonds if you fear inflation.

Sounds like you have a nice problem to work through! Best luck.

[52andout]

Thank you for your thoughts. If we had gotten this two years ago I would not have hesitated one minute to hook up with vanguard and do a 65/35 allocation.

Right now we have a few months but are strongly leaning towards CD's and let the dust settle. We lost enough , I am very thankful this is secure for our future.

[mathjak107]

im in the same boat.... we just sold two co-op apartments in nyc from a family owned real estate business we are un-winding and have 500k coming over the next few weeks.... i wouldnt think twice at one time about throwing 1/2 into our equity funds but now its a different story

its like after being down 300k we are getting a chance to be back where we were and i turned ultra chicken......


i was thinking larkin's income portfolio but wow can some of those components swing wildly like pcy.. i may be to chicken for that too

Larkin's portfolio:
25% iShares Barclays Aggregate Bond ETF (AGG) (Tracks a broad index of high-quality U.S. bonds)
25% iShares iboxx $ Investment Grade Corporate (LQD) (Tracks an index of the most liquid, long-term corporate bonds)
10% Fidelity Floating Rate High Income (FFRHX) (Invests in floating rate bank loans that automatically adjusts to rising short-term interest rates. It offers additional inflation hedge)
10% iShares MBS Fixed Income (MBB) (Tracks a broad index mortgage-backed securities)
7.5% SPDR DB International Govt Inflation-Protected Bond (WIP) (Invests in an index of non-U.S., inflation-linked bonds)
7.5% PowerShares Emerging Markets Sovereign Debt (PCY) (Tracks an index of emerging markets government debt)
7.5% iShares Barclays TIPS Bond (TIP) (Tracks an index of inflation-protected, U.S. Treasury securities)
7.5% iShares Iboxx $ High Yield Corporate Bond (HYG) (Tracks an index of high yield bonds