Looking for a parking place

[Thomas3857]

Hi all - Still reading, still learning with the help of this site. I'm 55 with net worth around $2.5m. Recently moved $ to Schwab from a FA (pretty sure I made a few boat payments for him) and am sitting on nearly $1M cash and not sure where to park it (FA wanted me to put it in a variable annuity (that's why I left him). Have a separate emergency fund. $350k of it is sitting in a SEP IRA sweep account with other $650k getting 1/2 percent from Citibank on the other $. Where can I do better? I know it's all about risk/return and want to be very conservative w/this allocation. Thoughts? Thanks

 

[mpeirce]

0.5% is a pretty good rate. I doubt you'll find anywhere that's as "safe" that gives you more.

 

[pb4uski]

Over the past couple years I have bought a lot of preferred stocks and baby bonds (publicly traded bonds that are $25 par rather than $1,000 par). While I prefer investment grade credits, I've bought some that are below investment grade.

Yields are in the 4%+ range, but you really need to be aware of call risk. We have an ongoing thread on preferred stocks.

2015-2020: https://www.early-retirement.org/fo...bad-and-the-in-between-2015-2020-a-77428.html

2021: https://www.early-retirement.org/fo...the-bad-and-the-in-between-2021-a-107188.html

Many of mine are household names like Bank of America, Capital One, Duke Energy, Goldman Sachs, Hartford Financial, JPMorgan Chase, MetLife, Schwab, and Wells Fargo... others are more obscure names.

Other good sources are quantumonline and innovativeincomeinvestor.

You could try to get your Schwab guy to recommend perferreds based on criteria that you select but I'm not confident that you'll get much out of it... IIRC I tried and they didn't have much to offer.

Schwab has a decent screener... go to Research... Screeners... Preferred Shares. There are 120 different issues that yield over 4% and are rated BBB or better by S&P and Baa or better by Moody's.

 

[disneysteve]

What is your goal for this million? How is your other $1.5 million invested currently? Are you retired or still working? If working, when are you looking to retire?


Is all of the money in the SEP IRA? I wasn't clear on that.

 

[OldShooter]

What is your goal for this million? ...

This. You need to look at the whole enchilada. If you don't know where you're going any road will get you there.

 

[Bamaman]

We're in a time where getting financial advice is difficult. With the stock market at an all time high and interest rates at an all time low, it's all just a crap shoot. That's a lot of cash to not have earning much.

You might want to find a fee based financial advisor that's a fiduciary--no salesman of any kind. Many start with coming up with an Asset Allocation and then make decisions on where you're comfortable.

 

[Thomas3857]

Thanks for the replies. The other 1M is in a 70/30 AA and approx. $500k in real estate (one rental and one residence). Goal is to retire at 60 in about 5 years. I know I have too much cash on the sidelines but can't help thinking the market is due for a correction. Would love to earn 4% with minimal risk but I guess so would everybody. I'll take a look at pref. stock maybe even a muni ladder. Thanks

 

[chassis]

Look at a dividend stock. I moved some of my cash position out of a 0.4% HYSA and into dividend shares.