Made the money... now what?

[pletal]

Happy Holidays.


Here is my situation. Married 2.5 decades sold company and am not 60 yet. No children, no mortgage no crazy lifestyle.



Have been working, saving etc forever. Used my time to make money but never spent much time really studying investing. That being said we have a rather high net worth. No pensions are coming. Most of money is invested in CD's Muni Bonds etc. It worked rather well over the years, rates were higher. Interest and dividends are kicking off 250k a year .. now. With the state of the world its looks like that will be dropping as CD's mature etc. Looking for some advice on where to put the money when these things mature. I really (get ready to it)... would like to see a return of at least 4%. I do have a fidelity account FSKAX / FXAIX mutual funds. I have bought a couple of fixed annuities (term) . Looking for income , not really growth, but that will work also, Thanks

 

[travelover]

Most retirement planners assume a mixture of stock and bonds on either side of 50/50 to account for inflation . I use and suggest a lazy portfolio . https://www.bogleheads.org/wiki/How_to_build_a_lazy_portfolio

 

[OldShooter]

I suggest that you start here: "The Coffee House Investor" by Bill Schultheis https://www.coffeehouseinvestor.com/ Assuming you like the book, Bill has just published a follow-on that you will probably like too.

Next to read: "The Bogleheads Guide to Investing" by Taylor Larimore et al https://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Larimore/dp/0470067365

This kind of decision is very personal and depends on your overall financial objectives, your overall portfolio size, and (importantly) on your tolerance for volatility. If history is any guide, there will be a number of people who jump in here with very specific recommendations despite knowing almost nothing about you or your situation. All will be worth reading, but take them with a pound of salt until you have done some basic reading and thinking for yourself.

There is no rush here. If it takes you six months to make a decision you will not remember that a couple of years from now. If OTOH you rush into a mistake you will remember it forever.

 

[mrfeh]

I really (get ready to it)... would like to see a return of at least 4%. I do have a fidelity account FSKAX / FXAIX mutual funds. I have bought a couple of fixed annuities (term) . Looking for income , not really growth, but that will work also, Thanks

https://www.bogleheads.org/wiki/Bogleheads®_investing_start-up_kit

Sounds like you have way more money than you need. Depending on your risk tolerance, I'd set an AA somewhere between 30/70 and 60/40 in a 2 or 3 fund portfolio and be done.

 

[pb4uski]

Welcome to the forum.

As you may well know, fixed income is a very challenging area in this low interest rate environment. Even longer CDs are barely 1% so your 4% target is unrealistic until interest rates "normalize" (assuming that they eventually will).

For short term money, I like online savings accounts (~0.5% these days), Dominion Energy Reliability Investment and Toyota IncomeDriver notes (~1.25%-1.5% but with some credit risk) and investment grade preferred stocks and baby bonds (~4-6% but be careful of call risk).

 

[38Chevy454]

https://www.bogleheads.org/wiki/Bogleheads®_investing_start-up_kit

Sounds like you have way more money than you need. Depending on your risk tolerance, I'd set an AA somewhere between 30/70 and 60/40 in a 2 or 3 fund portfolio and be done.

X2, the mix with equities will help the income side, and the fixed income side will provide stability. Read the books suggested, read a bunch on the forum here, and you can learn and become a DIY investor. There is always one financial advisor with your best interests at heart - you.



I noticed you mentioned annuities, those are generally not recommended here, but if you already have them, might be best to just leave it as-is. Just don't get talked into buying any more annuities. Also seems you are quite conservative in your investments, and as you and other replies pointed out the fixed income returns currently are quite low. Do a risk tolerance assessment and determine what your risk tolerance is, and then decide on an asset allocation that you can be happy with. Congratulations on the success of your business and selling it, not enjoy retirement.

 

[pb4uski]

.... I noticed you mentioned annuities, those are generally not recommended here, but if you already have them, might be best to just leave it as-is. Just don't get talked into buying any more annuities. ...

While I agree, not all annuities are created equal. I think all flavors of variable annuities, equity indexed annuities, et al are pretty bad. Single premium immediate annuities are ok in some situations but offer very poor returns (not to be confused with payout rates) so I would prefer CD ladders, even at today's low interest rates.

The only annuity that I would consider, and I suspect that the OP may have, are multiple-year guaranteed annuities (aka MYGAs). They are functionally similar to CDs but issued by an insurance company rather than a bank. They often are competitive with CDs in terms of interest rates, but have slightly more credit risk and higher early withdrawal penalties.

 

[OldShooter]

@pletal, since @38Chevy454 also mentions risk tolerance I'll amplify a little.

First, it is common to confuse volatility with risk. It's emotionally exciting to see your portfolio value drop by 30% in a day or two, but history says that it will come back. There are many, many "risk assessment" questionnaires on the internet, quizzing you on how you would react if your portfolio goes down by various amounts. Sitting in your recliner chair, it is easy to fill these out completely without the gut wrench that happens in the real world. So ... understand that you will not understand your tolerance for volatility until you get whacked once or twice. Then you will know. But here is the good news, from history again: Don't react. Don't do anything. Remember Warren Buffet's wise advice: "Much success can be attributed to inactivity. Most investors cannot resist the temptation to constantly buy and sell. ... Lethargy bordering on sloth should remain the cornerstone of an investment style."

 

[RetireeRobert]

Dividend paying common stocks can get you into the 3% to 4% area with some large strong stable companies.

Can also look into preferred stocks to juice the yields a bit, maybe 4% to 5% in reasonable companies.

 

[Markola]

Asking Internet strangers for fixed income tips is really no different than asking us strangers for hot stock tips. Since you haven’t studied investing, I recommend you have a session with a quality, fee-only financial planner, such as from the Garrett Financial Planning Network, to figure out what you and your spouse want in life and then build a comprehensive funding plan to support it. Good luck.