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Where would you put extra cash to generate income
Old 11-03-2015, 12:51 PM   #1
Dryer sheet wannabe
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Where would you put extra cash to generate income

I am 1 year from ER and need advice where to put $1.5 million to generate income.
We already have $3.5 million in equities, but sitting on too much cash.
DW retired last year at 52 yrs and I will be 60 next year.
We have kept track of expenses for the past year and looks like we need approx 135,000 for annual expenses.
We still have a 15 yr old daughter at home. House is paid for and worth 600k, we also have 1 rental that we generate 700.00 per month profit.

Any advice on where to put the cash would be appreciated.

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Old 11-03-2015, 04:18 PM   #2
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Location: San Diego
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Lots of places to park cash.... It's the generating income party that is hard. You could ladder CDs, or buy TIPs.... But that isn't a lot of income.
Retired June 2014. No longer an enginerd - now I'm just a nerd.
micro pensions 7%, rental income 18%
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Old 11-03-2015, 05:13 PM   #3
Recycles dryer sheets
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Unless there's a compelling reason to do something different I suggest start with target asset allocation based on your own inputs and treat the money as all the same. So if you're 60/35/5 or 40/40/20 or whatever.

The other 1.5m feels different but it isn't really

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Old 11-03-2015, 05:23 PM   #4
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So right now you are 70/30 or 70/0/30. Are you comfortable with that AA?

If so, what I would do is put 250k in an online savings account (mine earns .95%) and arrange a monthly $11k transfer to the bank account you use to pay your bills. Then invest the remaining $1,250k in CDs or target maturity bond funds or target maturity muni bond funds if you are in a high tax bracket.

If once you ER you change your equity elections to take dividends in cash rather than reinvest dividends then between dividend income and the $250k cash allocation you should be able to live on those for 3-4 years if the stuff hit the fan and you needed to.
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