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-   -   Where would you put extra cash to generate income (https://www.early-retirement.org/forums/f28/where-would-you-put-extra-cash-to-generate-income-79330.html)

jhbstp 11-03-2015 12:51 PM

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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rodi 11-03-2015 04:18 PM

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.

petershk 11-03-2015 05:13 PM

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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pb4uski 11-03-2015 05:23 PM

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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