What would you do?

[street]

If you had 2 million in your portfolio that you might never need how would you invest it ( AA percent etc.) and what plans would you have for the money?

 

[6miths]

VTI and VXUS (or maybe just VT) maybe some small value tilting. For kids and (yet to be born) grandkids.

 

[razztazz]

Hmmm...? Might never need? My plans for it would be nothing. I don't need it. It's excess, right. But I might/could/maybe someday need it. AA maybe 30/70 or 35/65. Could even let it stay in safe-safe-safe investments if I ma older. Two-mil is a lot and not going to evaporate overnight.

But if I am young and looking at a lot of years ahead I would concede it would be reasonable to try to have it at least draft inflation so some growth would be called for.

 

[FlaGator]

It would be intended for multi-generation wealth and would be 100% in a diversified passive equity portfolio.

 

[Kwirk]

We're in a similar position. I think of the money as a retirement fund for our children (and possibly grandchildren). I invest it as I would if I were in their position (mid 30's). So it's mostly in stock index funds and short term bonds, about 80/20.

 

[W2R]

I'd invest it according to my present asset allocation and do nothing with it, unless an emergency arose.

 

[bingybear]

I'd invest it according to my present asset allocation and do nothing with it, unless an emergency arose.

+1

OP - I catch the might and I take that is you might need it.
While we have different accounts, I don't think in terms of buckets, thus I don't really think I would treat it differently in general.

I might consider tax planning if it fits your situation.

 

[street]

I thank you for your suggestions very much appreciated. Would you recommend putting 100% in equity funds? I would agree on heirs and charity groups.

 

[bingybear]

I would treat it as part of your portfolio. I would not treat it differently. If you want to skew your AA because of it, so be it. At the end of the day if you invest this $ differently and it does better... and your needed $ do much worse, then you will just use the "might not need" money to prop up your assets.

You have to separate TIRA, Roth, and taxable accounts. You are not required to separate the "might not need" dollars beyond that. However, you can.

I would not necessarily invest the all the "might not need" $ in a single account. I would position the $ but position the $ based on best account type for type of asset.

If you have a number of accounts, make sure you don't create wash sales among accounts especially if you reinvest distributions.

 

[pb4uski]

It would be intended for multi-generation wealth and would be 100% in a diversified passive equity portfolio.

+1 on the first part.

My Mom has money (but not $2 million) that she will never need and will eventually go to her kids... I invest it 60/40 just like I do my own money... I guess I could be more aggressive with it but I don't.

 

[corn18]

I'd invest it according to my present asset allocation and do nothing with it, unless an emergency arose.

+2

 

[HarveyS]

I'd suggest you talk with a (fee-only) tax professional and a financial planner. You have not given us enough information to provide you a well thought out answer. What other money do you have that you identify as money you "need" and how is it invested? What is the AA and what type of account, pre-tax, tax-deferred, etc.? How much of your assets are in real estate, etc.?

For instance, if you plan to leave this as an inheritance to someone, tax implications matter in what account the money that is left to them is in. If you plan to leave it to charity, again the accounts can make a difference. Therefore, you need to be using the money you "need" from your other accounts.

2 million is a s**t-ton of money, and spending a 500-1000 to get the advice of professionals is a good investment, IMHO. If you invest it at Vanguard or Fidelity you can access their professionals for free.

All that said, if it really is money you might not need, then I would invest it heavily in equities; 80% equity, 20% bond. But, the type of account this money is in makes a big difference. Don't forget to consider that.

 

[Lukeee]

$100K each into separate accounts to teach the kids long term investing strategies and let them manage it supervised.

$200K (10%) into an aggressive strategy portfolio that chases high growth stocks because I enjoy trading. It would be 0 stress to perform at this point.

the balance into an index mutual fund.

 

[Car-Guy]

I'm in that situation now. (For me, that's bucket #2 if you have read my past threads on related topics) It's my emergency funds that I'll probably never touch and it's all in fixed income investments. No heirs to worry about. Bucket #1 should be more than enough.

If I ever need bucket #2, I "plan" to become a LBYM type. Until then, I'm blowing that dough! I hope I never need to "try" to make that switch.

 

[donheff]

I'm with the others that recommend adhering to your overall AA. If you want to leave an inheritance to the kids and you have a larger portfolio than you need to meet expenses according to a variety of SWR approaches, you could increase the equity portion of the AA. I am in that position and am currently at about 64/36 equities to bonds. At some point I may ask the kids what AA they would like to see. They might prefer more aggressive but they will be divvying up my pot and might prefer moving a little lower on equities.

 

[VanWinkle]

For me the question is "What is the timeline for this money". If the age of the person deciding on the allocation is within 10 years of life expectancy, I would keep the same allocation as the other investments. If this money is not to be distributed for 20-30 years, I would be much more aggressive with the allocation (80/20).

 

[MarieIG]

The "might" part is key. If I was certain I would never need it, I would probably put in a fund like Vanguard Total Stock Index Fund - set it and forget it. I would not want it to be generating a lot of income tax in the meantime. If I thought I might need it I would look at 75/25. Any IRAs, 401(k)s should have specific beneficiaries. I agree with consulting a fee-only estate planning professional (possibly an estate/ tax attorney) as well.

 

[imoldernu]

If you had 2 million in your portfolio that you might never need how would you invest it ( AA percent etc.) and what plans would you have for the money?

I'd try not to wake up.

 

[Car-Guy]

I'd try not to wake up.

 

[OldShooter]

It would be intended for multi-generation wealth and would be 100% in a diversified passive equity portfolio.

+1 We are 75/25 at age 71. The 75 is in passive total world stock market; two-thirds of it will be the core of our sons' trust funds when that day comes. One third will go to charity.

The 25 portion is almost certainly more money than we will ever need.

 

[Fedup]

My Roth is 100% in equities, most likely I won’t be needing it. But my traditional IRA has much lower equities. So if you have Roth IRA, invest for your heirs, otherwise keep investing with your AA.

 

[NW-Bound]

If you had 2 million in your portfolio that you might never need how would you invest it ( AA percent etc.) and what plans would you have for the money?

I don't know about your heir situation, but regarding investment performance you have been doing very well as reported in the other thread. Are you sure you want to listen to us about how to invest?

I remember you said your WR was only 1%, so you do not care to "blow the dough" either. If you have no heir, then there should be some worthy causes that will make good use of the money. It may take some time to think about this, vest them, and to decide.

 

[Lukeee]

I'd try not to wake up.

 

[street]

I don't know about your heir situation, but regarding investment performance you have been doing very well as reported in the other thread. Are you sure you want to listen to us about how to invest?

I remember you said your WR was only 1%, so you do not care to "blow the dough" either. If you have no heir, then there should be some worthy causes that will make good use of the money. It may take some time to think about this, vest them, and to decide.

I have one heir and right now my WR is less then 1%.

I don't want to sound bullish, but it is what it is, we are here for who we are, that is why I feel comfortable to ask a question like this.

One large part of my portfolio is an IRA and that would be the money I would never need that I could see. If I do I have it.

I'm 61 and right now this money is at 75/25 so does this make any difference on advise?

My hope for the money would be for my one son and a charity I have been a part of for over 35 years. I also would like the money to grow and I also know the risk but since it will be a long term venture I feel comfortable leaving it in a high AA.

 

[NW-Bound]

Being a market timer, and an active investor at that, I have run stock AA above 75% in the past, but am now trying to bring it down to 60% and below. I said "trying", because I am such a stock lover and always find stocks I want to buy, even though I think the market is topping out.

But why should anyone listen to me, a DMT? My track record is spotty too.