Exploring different options to FIRE!

[xmanz3]

I just turned 50 and my wife is 45. Even though FIRE is around the corner, I’m waiting for my kids to go to college, work on a few more projects, before we devide to sell our primary residence and start traveling around the world.

PENSION: $55,800 per year

HEALTH INSURANCE COST: $0

CASH: $550,000

ROTH IRA: $20,000

REAL ESTATE EQUITY: $4.4M (RE HAS BEEN REALLY GOOD TO ME)

CURRENT MONTHLY INCOME: $17,500

MONTHLY SAVINGS/INVESTING: $8-10k

We are currently semi-retired, but we are looking forward to travel more, purchase a property overseas, and move around our 3-4 properties throughout the year.

After we sell some of our real estate, keep a few rentals, and keep bringing some passive income from some of our businesses, we should have about $40,000 per month as retirement income not including SS.

What are your thoughts and where do you recommend to invest $2M in order to have some safe and sound returns?

 

[38Chevy454]

The question is time frame for that money, and your risk tolerance. Do you intend to withdraw from this each month? Keep for inheritance? It seems you have sufficient income with pension, rental income and later SS; that you are looking at this money as quite long term. Pre- or after-tax money?

 

[xmanz3]

I'm thinking about doing this in the next 6-10 years.

We intend to withdraw each month, but since the properties we choose to keep would be paid off I hardly doubt we will spend $40k per month.

The pension is non taxable and the rest of the income would be mostly pre tax.

 

[38Chevy454]

Given what you say, it seems you could be pretty high equities with this money. After all it is not money you need to live on. It is extra, call it discretionary spending. Assuming you can handle some volatility, a low fee index fund would be good. Provide diversity, and would follow the index while providing inflation protection and increased growth. You could do some fixed income (bonds, CDs, federal securities) to make up whatever percentage you find works with your asset allocation (derived from your risk tolerance).

The other thing you mention is you are still working until kids get out of college, so that money is going to grow for several years before you even consider withdrawals. I consider money past 5 years to be long term type investment. Your 6-10 year time frame supports being higher equities at least until withdrawals begin.

 

[Koolau]

Given what you say, it seems you could be pretty high equities with this money. After all it is not money you need to live on. It is extra, call it discretionary spending. Assuming you can handle some volatility, a low fee index fund would be good. Provide diversity, and would follow the index while providing inflation protection and increased growth. You could do some fixed income (bonds, CDs, federal securities) to make up whatever percentage you find works with your asset allocation (derived from your risk tolerance).

The other thing you mention is you are still working until kids get out of college, so that money is going to grow for several years before you even consider withdrawals. I consider money past 5 years to be long term type investment. Your 6-10 year time frame supports being higher equities at least until withdrawals begin.

Agree. With good income, you can shoot the moon with "extra" investment and invest in equities. But, if insisting on "safety" the usual suspects are available (Treasury bills/bonds, CDs, well-rated insurance products like MYGAs.)

 

[SnowballCamper]

If you're going to have $40,000 per month in income, you might want to be all in municipal bonds. I'm sure lots of tax accountants would be glad to help with some tax strategies. Congrats on winning the game!

 

[anothercog]

How is your health insurance $0? Will it be the same when fully retired?

 

[MarieIG]

Your accomplishments are certainly impressive. I would like to see you stuff as much into your Roths as reasonably possible depending upon you tax bracket, to give you a bit of non-taxable options later on in the game, vis-a-vis spending, inheritance or RMDs. Also is your spouse financially savvy and does she get the tax free health care if you pass first? You mention a non-taxable pension, which is great, but I don't know whether there is a joint and survivor option.

Regarding the safer investments (which might include treasuries, TIPS, CDs within FDIC limits, annuities w/n stated guarantee limits) , the trade off may be growth limitation and/or inflation risk.

 

[BGH1]

Buwahahaaa

 

[Stormy Kromer]

I just turned 50 and my wife is 45. Even though FIRE is around the corner, I’m waiting for my kids to go to college, work on a few more projects, before we devide to sell our primary residence and start traveling around the world.

PENSION: $55,800 per year

HEALTH INSURANCE COST: $0

CASH: $550,000

ROTH IRA: $20,000

REAL ESTATE EQUITY: $4.4M (RE HAS BEEN REALLY GOOD TO ME)

CURRENT MONTHLY INCOME: $17,500

MONTHLY SAVINGS/INVESTING: $8-10k

We are currently semi-retired, but we are looking forward to travel more, purchase a property overseas, and move around our 3-4 properties throughout the year.

After we sell some of our real estate, keep a few rentals, and keep bringing some passive income from some of our businesses, we should have about $40,000 per month as retirement income not including SS.

What are your thoughts and where do you recommend to invest $2M in order to have some safe and sound returns?

Feed the hungry. Clothe the poor. That will give you a safe and sound return.

 

[Koolau]

Feed the hungry. Clothe the poor. That will give you a safe and sound return.

Hear, hear!

 

[NgineER]

I'm thinking about doing this in the next 6-10 years.

We intend to withdraw each month, but since the properties we choose to keep would be paid off I hardly doubt we will spend $40k per month.

The pension is non taxable and the rest of the income would be mostly pre tax.

Nice work! You have won the game! I feel a little jealous of your position, I too am 50 but only have $1M in real estate but have more invested. I don't have a pension either and my monthly cash flow lags yours by a mile (or two).

Now it is up to you to decide on how to spend/give/invest your money.
I would consider your real estate and pension more like fixed income so would avoid investing your money into bonds. Maybe invest it in non-dividend stocks, like BRK.B or Apple or a growth ETF.

Just curious, what are your passive business that generate such lush cash flow?