What would you do with $700k ?

[Brat]

I've acknowledged that I had my mind made up, sorry you didn't catch that. But I did change my mind, I posted earlier that I plan on putting $500k of it in CDs and $100k in to a vanguard utility fund and $100k in to Vanguard bond fund. So I did take some advice and as I've said before, thank you all for your input and yes I should have worded it different, have a good day.

In the current environment this makes great sense to me.

 

[LeavingOhio]

Right now I have $700k that I need to invest, I plan on retiring in the next 5 years and will have another $5-700k by that time. I'm in my mid 40s, I'll also have about $20k a year in rental income and my family and I can live fairly well here in rural Ky off of $50-60k a year. Very seriously thinking about CDs, local bank has a 2.1 % cd. Your thoughts ?

Hmm.

I don't care too much about what you do with the money you currently have other than I wouldn't want you to lose it.

I will assume that you will retire at age 50 and with $1.2 million at that point.

I would put 80% of that in stocks within mutual funds and 20% in CDs (since you seem to like them) and/or bonds.

At age 50, you potentially have a long time to live yet, so I would take 3% ($36,000) from that pile and add to it the $20,000 from the rental and live on that $56,000 (yes I know there will be taxes). Even being debt free and growing your own food, you won't be living large on that, but you can manage assuming you don't have other big money drains that you haven't mentioned. I wouldn't take any more than 3% unless there's a big stock uptick, and I would plan to try not to deplete your pile until age 60 minimum. Then, if you want to plan for 30 more years of life, figure out if you can or need to take out more. Once you hit 62, you can take early SS if you like.

 

[Mulligan]

Oneday, We all know investing is not a 2 day proposition... But if you have felt tremendous relief not being caught in the recent downdraft, and not concerned you may be losing out on a "bargain", then you have just reinforced to yourself you have made a wise decision.



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[Turn_the_Page]

I'd fund a 'bucket' with several years of living expenses, CD's or whatever vehicle you prefer. The rest invested at your desired/selected asset allocation.

I understand the caution heading into retirement. We went conservative a few years ago and are over-weighted in T_bills compared to our target allocation. This in addition to 3-4 years of living expenses sitting in two different savings accounts. It just helped me sleep better at night.

 

[OneDay]

Oneday, We all know investing is not a 2 day proposition... But if you have felt tremendous relief not being caught in the recent downdraft, and not concerned you may be losing out on a "bargain", then you have just reinforced to yourself you have made a wise decision.



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Reinforced, indeed. I don't seem to have a lot of faith in our markets at this time. Thank you all for your input.

 

[Mulligan]

Reinforced, indeed. I don't seem to have a lot of faith in our markets at this time. Thank you all for your input.

You do not have to feel bad for being conservative. I have a friend whose dad is very wealthy (though you cant tell by his house or clothes he wears). If he couldn't put all his money in the local banks, his second and only other option would be building a huge safe to put in his house...Online banking CDs? Thats crazy talk to him...Where is my money at and how do I know I can ever get it? So see, you are way more of an aggressive investor than him!


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[gzone]

Right now I have $700k that I need to invest, I plan on retiring in the next 5 years and will have another $5-700k by that time. I'm in my mid 40s, I'll also have about $20k a year in rental income and my family and I can live fairly well here in rural Ky off of $50-60k a year. Very seriously thinking about CDs, local bank has a 2.1 % cd. Your thoughts ?

I can't tell you what I would do, I can tell you what I'am doing.
In 2012 I picked up 100 share of $BRK/B at $80.00 p/s I picked up a little more during the BRIXIT event. At the moment it is value at $144.40 p/s.

My thinking can't beat Warren Buffet, and so far it's been true for me. He is making me wealth.

The other Item I hold is $PGX an ETF from Power Shares. it pays $0.07 per share/per mont at the current price of $15.30...about a 5.73% annual yield. the Divi is payed monthly. With Schwab $PGX has no commission so that is $8.95 more to invest.

I hope this helps...just my 2cents.

 

[DrRoy]

You can make a complete diversified portfolio with that amount. You mentioned having rental property. How about more real estate?

 

[targatom2019]

If you don't the heart for the stock market then bonds is your next best. I have about 500K in insured A rated MUNI bonds, very safe bet with average 4.5% return annually with no federal tax and some with no state tax. My goal is to protect my money from inflation.

 

[Earl E Retyre]

If you don't the heart for the stock market then bonds is your next best. I have about 500K in insured A rated MUNI bonds, very safe bet with average 4.5% return annually with no federal tax and some with no state tax. My goal is to protect my money from inflation.

How many years out do you need to commit to in order to get 4.5% return on an A rated munibond? Are you sure that this is protecting from inflation 10, 20 ... years from now?

 

[targatom2019]

How many years out do you need to commit to in order to get 4.5% return on an A rated munibond? Are you sure that this is protecting from inflation 10, 20 ... years from now?

My bond portfolio of 500K, I own about 85 AA rated insured muni bonds, each bond worth $5,000 and I do not own more than 3 bonds with any municipality. I am 47 years old and I build a bond LADDER portfolio with maturity dates from 2017 to 2024. I get close to $23,000 per year in interest and I use the money to buy more bonds. My portfolio grows about 4.5% annually and will always be ahead of inflation. It took me almost 2 years to buy 85 AA rated insured muni bonds because the 4.5% don't come on the secondary market offten.

Note: My bond portfolio is only about 15% of my net worth, it's a very safe bet against inflation and very liquid if needed.

 

[gauss]

I would put it into a nice low-expense index-based Balanced fund and forget about it. (Well I probably would check the value when the stock market hits new highs.)

I wouldn't sweat timing the market because the fund will be self-Balancing.

"Set it and forget it" Investing has been great since I have adopted this strategy since FIRE'ing ~4 years ago. Lower stress/anxiety and better results.

-gauss