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Old 09-07-2021, 02:24 PM   #21
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Head scratcher. It’s great they accumulated $1.5M. Guessing basis in that is pretty high and lost opportunity to date.
Note: They came into money - not through accumulation.
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Old 09-07-2021, 03:30 PM   #22
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Leave 3-4 years of living expenses in a bank or laddered CD so that they have liquidity. Since they are risk averse and think the market might go down, invest the rest at 10% of assets per month into VTSAX, S&P500 ETF or equivalent.
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Old 09-07-2021, 03:33 PM   #23
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Jam it into Wellington and then draw a fixed 4% of the whatever the balance is at the end of each year. Most years will enjoy getting a raise and occasionally will take a cut. No advisors or complicated financial plans needed.
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Old 09-07-2021, 03:44 PM   #24
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I would advise them to see a fee only financial planner. Under no circumstances would I offer investment advice even if they ask. They should be holding stocks, but do you *really* want to be the one offering that advice? At their age and no earned income its a very delicate situation.

The one exception I would consider is advise delaying SS til age 70 for the 'guaranteed' 8% return.
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Old 09-07-2021, 03:48 PM   #25
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While they dither maybe put some in Marcus at .6% after a .1% AARP interest bump. And/or Ally at .5%.
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Old 09-07-2021, 03:58 PM   #26
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Go with them to Schwab or Fidelity (where their options can be explained and risk analysis forms looked at, while holding their hands) before some helpful acquaintance of theirs learns of their situation and introduces them to "his guy" at EJ or worse.
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Old 09-07-2021, 03:58 PM   #27
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... I think they should go to Fidelity or Schwab for some advice also.
Befor they do that I suggest one free download and a couple of easy-read books:

"If You Can" by William Bernstein https://www.etf.com/docs/IfYouCan.pdf (free 16 page download)

"The Coffee House Investor" by Bill Schultheis https://www.coffeehouseinvestor.com/ (This is Bills first book; read it before reading his second one.)

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

After reading they might still benefit from talking to an advisor, but they will be better-informed customers.
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Old 09-07-2021, 04:21 PM   #28
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First, unless they are in bad health, they should probably delay taking SS... off-the-cuff I'd say FRA for her and 70 for him. Given what you provided in the OP, it looks to me like their SS would be ~$45k a year in 2021 $$$ if they both delay.

$1,500 at 62/70%*124%*12 + $1,500/70%*50% spousal benefit*12 = $44,743

Meanwhile, until he reaches 70, they can create a ladder of 8 $50k MYGAs that mature annually between now and when he is 70 that will provide what they need at a reasonable return.

The rest could go in a conservative blended fund like Wellesley (and don't look at it).

I think that is an overall AA of ~20/80: bonds being $400k in the 401(k) guaranteed fund + $400k of MYGAs + 60% of $700k in Wellesley
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Old 09-07-2021, 04:38 PM   #29
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I wouldn't give them ANY advice, even if they asked for it (which I gather they have not done).

Here's my unsolicited advice which you should probably ignore:

Enjoy your friendship with them. If they ask, tell them what you would do, but point out to them that you even went to a bunch of strangers on the internet to see what they thought because you really don't know.

Worst case scenario is that you give them some kind of advice, they interpret it however they will, they lose their money and you lose their friendship. Try to avoid this. Life is too short to spend a lot of time rebuilding relationships.
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Old 09-07-2021, 04:41 PM   #30
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Go with them to Schwab or Fidelity (where their options can be explained and risk analysis forms looked at, while holding their hands) before some helpful acquaintance of theirs learns of their situation and introduces them to "his guy" at EJ or worse.
+1

Guarentee the Eddie guy will put their minds to ease about market tops.
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Old 09-07-2021, 04:53 PM   #31
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I wouldn't give them ANY advice, even if they asked for it (which I gather they have not done).
Not sure where you got that from, as I did not say either way. But as you ask they did in the way of discussion. We know each other well and have advised in the past on other issues. We chatted about it. So that prompted me to ask the group.

They do live in a different state though so we can only provide limited support. I stressed that I would only gather information for them, but not give any specific recommendations as that was a good way to ruin a friendship if things did not go the way one expects. They do know that we are not fond of the stock market, although while we were accumulating we were heavily invested. But when we returned with what we though was enough we changed our approach.

All the input is good here so, once compiled I will simply send it to them.
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Old 09-07-2021, 05:06 PM   #32
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I wouldn't give them ANY advice, even if they asked for it (which I gather they have not done).
Not sure where you got that from, as I did not say either way.
That's right. I must admit that I wondered why not. You cut out what I suggested you could do if they actually asked for actionable advice:
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Originally Posted by W2R View Post
If they ask, tell them what you would do, but point out to them that you even went to a bunch of strangers on the internet to see what they thought because you really don't know.
Moving on,
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Originally Posted by ShokWaveRider View Post
But as you ask they did in the way of discussion. We know each other well and have advised in the past on other issues. We chatted about it. So that prompted me to ask the group strangers on the internet.
(blue words mine, not ShokWaveRider's)

Is "discussion" and "chatting" the same as asking for specific, actionable advice? I guess we just see this differently. Apparently I offended you somehow and if so, my apologies.
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Old 09-07-2021, 05:16 PM   #33
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Apparently I offended you somehow and if so, my apologies.
Absolutely not, in no way did it even cross my mind. No apologies needed. And yes I got your point, thanks for it.
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Old 09-07-2021, 05:55 PM   #34
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Jam it into Wellington and then draw a fixed 4% of the whatever the balance is at the end of each year. Most years will enjoy getting a raise and occasionally will take a cut. No advisors or complicated financial plans needed.
I love the Wellington but since about 2/3 of the money is taxable it might kill the ACA help.
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Old 09-07-2021, 06:04 PM   #35
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Google "Lazy Portfolio". Read about it and advice them.
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Old 09-08-2021, 12:05 AM   #36
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First, unless they are in bad health, they should probably delay taking SS... off-the-cuff I'd say FRA for her and 70 for him. Given what you provided in the OP, it looks to me like their SS would be ~$45k a year in 2021 $$$ if they both delay.

$1,500 at 62/70%*124%*12 + $1,500/70%*50% spousal benefit*12 = $44,743

....
+1
Especially as SS will be indexed to inflation, and will last as long as they are alive.
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Old 09-08-2021, 12:44 AM   #37
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I'd suggest keep some actual cash, maybe $150000 as emergency fund (10% of their $1.5 million stash) which could fund three to four years living expenses. Then keep perhaps another 30% or $450000 in a government backed mortgage fund such as Vanguard's VFIIX which over time could yield 3% annually on average or maybe more. Then keep 40% or $600000 in a growing dividend stock fund such as DGRO which would give off a growing stream of dividend income. The final 20% or $300000 put in a broad index fund of strong companies for long-term growth such as an S & P 500 index fund.
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Old 09-08-2021, 01:23 AM   #38
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All of these ideas are good but this one will give you the lowest income for the ACA which is good.


ACA cliff this year would have been about $68K had it not been wiped out by legislation for this year and next. $1.3M invested will not throw off that much in cap gains distributions and dividends. My after tax 70/30 portfolio of roughly double that amount throws off about $55K in dividends and little cap gains distributions.

The majority of that money will be used after they are Medicare age anyway. The main thing is they need to invest so they don’t lose to inflation. Inflation over a 30 year period will result in the money losing over half of its value to inflation alone, even at 3% inflation annually.
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Old 09-08-2021, 06:11 AM   #39
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ACA cliff this year would have been about $68K had it not been wiped out by legislation for this year and next. $1.3M invested will not throw off that much in cap gains distributions and dividends. My after tax 70/30 portfolio of roughly double that amount throws off about $55K in dividends and little cap gains distributions.

The majority of that money will be used after they are Medicare age anyway. The main thing is they need to invest so they don’t lose to inflation. Inflation over a 30 year period will result in the money losing over half of its value to inflation alone, even at 3% inflation annually.
They can pick any idea here. It does not matter so much which one it is that they do something.
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Old 09-08-2021, 06:13 AM   #40
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ACA cliff this year would have been about $68K had it not been wiped out by legislation for this year and next. $1.3M invested will not throw off that much in cap gains distributions and dividends. My after tax 70/30 portfolio of roughly double that amount throws off about $55K in dividends and little cap gains distributions.

The majority of that money will be used after they are Medicare age anyway. The main thing is they need to invest so they don’t lose to inflation. Inflation over a 30 year period will result in the money losing over half of its value to inflation alone, even at 3% inflation annually.
Very true for indexing. Now for the Wellington that might be a different story. I would guess it throws out about 7% of its value in dividends and capital gains.
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