What would you do with $700k ?

[Mulligan]

Investing has so many variables both intellectually and emotionally. Is a legacy important? Will inflation be that devastating to you? Would you sell out on a downturn, not being able to take the pain? Most people here are giving unemotional facts based on historical terms. But emotions may come into play for you and that can never be discounted.
Though statistically accurate, no one citing well meaning if not correct advise here will be giving you a bailout if market drops. The only thing we know for sure with that 1.4 million in 5 years you can dig $40,000 out of mattress every year for 35 years... And that isn't including interest in a 2.1% CD now. Plus you have SS coming online in your 60s too I assume.
My only advise is this....If your first thought was putting it all in CD's, the last thing I would be doing for psychological reasons is dumping a good chunk of my money in the market now matter how many years of living I have left. If you have 40 years of life left, you have time to slowly figure it out.


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[OneDay]

Thanks Mulligan

Investing has so many variables both intellectually and emotionally. Is a legacy important? Will inflation be that devastating to you? Would you sell out on a downturn, not being able to take the pain? Most people here are giving unemotional facts based on historical terms. But emotions may come into play for you and that can never be discounted.
Though statistically accurate, no one citing well meaning if not correct advise here will be giving you a bailout if market drops. The only thing we know for sure with that 1.4 million in 5 years you can dig $40,000 out of mattress every year for 35 years... And that isn't including interest in a 2.1% CD now. Plus you have SS coming online in your 60s too I assume.
My only advise is this....If your first thought was putting it all in CD's, the last thing I would be doing for psychological reasons is dumping a good chunk of my money in the market now matter how many years of living I have left. If you have 40 years of life left, you have time to slowly figure it out.


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. Thanks for your response. Many here are bullish, I am not, 5 years from now I may be, but not now.

 

[Mulligan]

Investing has so many variables both intellectually and emotionally. Is a legacy important? Will inflation be that devastating to you? Would you sell out on a downturn, not being able to take the pain? Most people here are giving unemotional facts based on historical terms. But emotions may come into play for you and that can never be discounted.

Though statistically accurate, no one citing well meaning if not correct advise here will be giving you a bailout if market drops. The only thing we know for sure with that 1.4 million in 5 years you can dig $40,000 out of mattress every year for 35 years... And that isn't including interest in a 2.1% CD now. Plus you have SS coming online in your 60s too I assume.

My only advise is this....If your first thought was putting it all in CD's, the last thing I would be doing for psychological reasons is dumping a good chunk of my money in the market now matter how many years of living I have left. If you have 40 years of life left, you have time to slowly figure it out.





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. Thanks for your response. Many here are bullish, I am not, 5 years from now I may be, but not now.

One Day, my bias admittedly is toward your viewpoint. I do not own CDs anymore, but up until a few years ago that was where my money was at. It is now not in common stocks either, but preferred utility stocks that yield 6% or so. Not recommending that to you, just admitting by bias leans your way.
I suspect some people glanced over your key points you mentioned later.... 1) Rental Income (mostly inflation protected income) 2) Frugality 3) Limited needs 4) Flexibility to cut spending.
Any decision has upsides and downsides to choices... But being a low cost of living rural person myself, and being around people like you I would make a substantial wager with anyone I could that the next 40 years you would do just fine doing what your initial thoughts are.
That doesn't mean of course that maybe you should not consider equities at some point. Its just I know "your type", been around them my entire life. And none of them are heading for homelessness under a bridge.
Its the ones that head into retirement NEEDING 7% market returns the rest of their life to make their retirement work are the ones I worry about.


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[Rickt]

Oneday, Since this is the money received from sale of property, do make sure you have figured out how much you will need to pay in taxes for the capital gains. You may realize you don't really have $700K after all.

For whatever amount you have left over after accounting for income taxes, I would suggest you pick an asset allocation that you are comfortable with in the long term and invest it for growth & income appropriately.

Best Wishes,
Rick

 

[eta2020]

Because the CDs are guaranteed and I'm very close to retirement and if I had to I could make it ok on my income from the CDs and my rental income, after I sell my business, that will just be bonus points, I'll feel more comfortable putting that money in the market.

Seems like you had made your mind If your comfort level is put it into CDs then you should do that. That is better then placing it into VTI and then panic selling if VTI drops 30%.


People were just trying to answer "What would you do with $700k ?".

 

[gcgang]

Stocks are too high, interest rates too low to get excited about investing it.

I'd hold cash/CDs or spend it on something rather than risk losing it.

 

[OneDay]

One Day, my bias admittedly is toward your viewpoint. I do not own CDs anymore, but up until a few years ago that was where my money was at. It is now not in common stocks either, but preferred utility stocks that yield 6% or so. Not recommending that to you, just admitting by bias leans your way.
I suspect some people glanced over your key points you mentioned later.... 1) Rental Income (mostly inflation protected income) 2) Frugality 3) Limited needs 4) Flexibility to cut spending.
Any decision has upsides and downsides to choices... But being a low cost of living rural person myself, and being around people like you I would make a substantial wager with anyone I could that the next 40 years you would do just fine doing what your initial thoughts are.
That doesn't mean of course that maybe you should not consider equities at some point. Its just I know "your type", been around them my entire life. And none of them are heading for homelessness under a bridge.
Its the ones that head into retirement NEEDING 7% market returns the rest of their life to make their retirement work are the ones I worry about.


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Thanks Mulligan and everyone else for their input, I appreciate all of it. I may have changed my mind somewhat, seriously considering putting 500k in to cds, another 100k in to VTEB " Vanguard bond "and the other 100k in to a VUIAX " vanguard utility ", or similar funds.

 

[jabbahop]

Regarding CD's keeping up with inflation, here is a good and simple article about whether CD's maintain your spending power.

http://www.investopedia.com/articles/investing/122215/cds-vs-inflation-are-they-keeping.asp

Conclusion
No matter which method you use to measure inflation, the after-tax return of traditional CDs is no match for the rate of inflation. If you're intent on investing in CDs due to a low tolerance for risk, consider some CD products that can potentially boost your returns without sacrificing safety.



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[OneDay]

Seems like you had made your mind If your comfort level is put it into CDs then you should do that. That is better then placing it into VTI and then panic selling if VTI drops 30%.


People were just trying to answer "What would you do with $700k ?".

Your right for the most part, I had my mind made up but I've changed it, lol. Thanks for your input.

 

[ShokWaveRider]

I am one of the "Stock Market" Avoidance team. While we will not make more money than some. We have been very lucky with the "right" CDs. In 1991/2 I invested ALL our retirement money in 7 - 9% CDs for 10 Years. I was poo poo'd by all the "smart" money I knew at the time. (A SoCAL Special at the time forgot where, I think it was OC Credit union). That virtually set up us up for our retirement. Unfortunately when they matured in 2001/2 Interest rates were only ~5% I slung it all in at between 4-5% for 5 years. After that I flopped about in short term money vehicles convinced the rates would go up, they did not. Then in around 2013/4 I jumped on a PenFed 3% 5 Year Special which is where ALL our non essential After Tax Money lives now. Currently Both DW and My IRA's are currently making 3.1% average. We have not regretted it one bit. Honestly, we have not noticed any significant inflation causing us to re-think things. We totally missed all the market crashes (and jumps, that in some cases only made folk back what they lost in the crashes)

We sleep very soundly and do not worry about a thing (Except Healthcare, but that is another story)

We keep 4 years living expenses in cash. We both retired once in 2003 for 5 years to go sailing, and then finally again in 2012. While we worked we saved as much as possible.

The moral of this story is you do what fits your own lifestyle and tolerance, and as long as you get a good nights sleep and do not want for anything, you Won!

 

[eta2020]

I am one of the "Stock Market" Avoidance team. While we will not make more money than some. We have been very lucky with the "right" CDs. In 1991/2 I invested ALL our retirement money in 7 - 9% CDs for 10 Years. I was poo poo'd by all the "smart" money I knew at the time. (A SoCAL Special at the time forgot where, I think it was OC Credit union). That virtually set up us up for our retirement. Unfortunately when they matured in 2001/2 Interest rates were only ~5% I slung it all in at between 4-5% for 5 years. After that I flopped about in short term money vehicles convinced the rates would go up, they did not. Then in around 2013/4 I jumped on a PenFed 3% 5 Year Special which is where ALL our non essential After Tax Money lives now. Currently Both DW and My IRA's are currently making 3.1% average. We have not regretted it one bit. Honestly, we have not noticed any significant inflation causing us to re-think things. We totally missed all the market crashes (and jumps, that in some cases only made folk back what they lost in the crashes)

We sleep very soundly and do not worry about a thing (Except Healthcare, but that is another story)

We keep 4 years living expenses in cash. We both retired once in 2003 for 5 years to go sailing, and then finally again in 2012. While we worked we saved as much as possible.

The moral of this story is you do what fits your own lifestyle and tolerance, and as long as you get a good nights sleep and do not want for anything, you Won!

https://dqydj.com/wilshire-5000-return-calculator/

I am not sure about "lucky" part of this. But I do agree you should do what you are comfortable with.

VTI would make annualy 10% plus over that entire 25 year period while resulting in significantly lower taxes since qualified dividends on up to 92k income are tax free.

BTW I hear Stock Market is overpriced for last 30 years. (from some people)

I am an Engineer so arguing with me is a bad idea

 

[Fermion]

The stock market was around 18,200 or so last year, and a year later it is 17,800, so after you figure in inflation, it is quite a bit cheaper now, not overpriced.

It might be overpriced next year when it is 19,000.

 

[ShokWaveRider]

If your plan is to have half in CDs and half in the market, why not put half in 5 year CDs and half in VTI?

Hindsight is always 20:20. I know a lot more folk who did not do as well also. You are assuming one had blinkers on, and did not change anything in the time period. Not all of us are that disciplined. I guess it would be different if we were skimping and scraping to get by I suppose. We have more than enough for what we need, so sleeping well is more important... to us that is.

 

[eta2020]

Hindsight is always 20:20. I know a lot more folk who did not do as well also. You are assuming one had blinkers on, and did not change anything in the time period. Not all of us are that disciplined. I guess it would be different if we were skimping and scraping to get by I suppose. We have more than enough for what we need, so sleeping well is more important... to us that is.

So for example myself... I am not assuming at all.

I bought things and made 0 changes in 2001 or 2008.

I am sleeping fine collecting 80k in dividends knowing that most likely next year I will collect more. Knowing that my investment is not eroded by inflation. Knowing that most likely next year my investment income will be up.

 

[papadad111]

I would invest it in some very simple investment vehicle (CDs are not investment)
Like put 100% into VTI

I'm along those lines too. The yield will give you about 12k per year pretax ... Fairly reasonable inflation hedge. Being in your mis 40s you can ride out market downturns still collecting the dividend and plan to have this money last for 40+ years.

 

[Mulligan]

I am one of the "Stock Market" Avoidance team. While we will not make more money than some. We have been very lucky with the "right" CDs. In 1991/2 I invested ALL our retirement money in 7 - 9% CDs for 10 Years. I was poo poo'd by all the "smart" money I knew at the time. (A SoCAL Special at the time forgot where, I think it was OC Credit union). That virtually set up us up for our retirement. Unfortunately when they matured in 2001/2 Interest rates were only ~5% I slung it all in at between 4-5% for 5 years. After that I flopped about in short term money vehicles convinced the rates would go up, they did not. Then in around 2013/4 I jumped on a PenFed 3% 5 Year Special which is where ALL our non essential After Tax Money lives now. Currently Both DW and My IRA's are currently making 3.1% average. We have not regretted it one bit. Honestly, we have not noticed any significant inflation causing us to re-think things. We totally missed all the market crashes (and jumps, that in some cases only made folk back what they lost in the crashes)

We sleep very soundly and do not worry about a thing (Except Healthcare, but that is another story)

We keep 4 years living expenses in cash. We both retired once in 2003 for 5 years to go sailing, and then finally again in 2012. While we worked we saved as much as possible.

The moral of this story is you do what fits your own lifestyle and tolerance, and as long as you get a good nights sleep and do not want for anything, you Won!

Some people can just not put their feet in another persons shoes, to understand no matter "what the math may say" a simple conservative strategy of money can be all one wants or needs. Good for you, Shok! You saved and accumulated enough in your lifetime to "invest" your money on your own terms as you see fit. That is enough of a reward in itself.


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[6miths]

In addition to what I already have? VTI.

 

[RobbieB]

Wine, women and song.

Hookers and blow.

Or just invest it. Ugh, so boring -

 

[Mulligan]

Wine, women and song.

Hookers and blow.

Or just invest it. Ugh, so boring -

Uhm, Robbie, I think you forgot one thing on your spending list....Solar Panels!


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[RobbieB]

Well, that works for me, but I have high cost juice.

On the other hand I did go for the one quote highest cost option I could find.

And I bought an ounce of pot today for $350.

But I got 2 free joints!

Life is good -

 

[gcgang]

I'm in similar situation to OP, having sold property and need to do something with proceeds. However, at 62 years old, different time frame.

I just put bulk of $ into Barclays 5 year CD @ 2.05%. Six month interest penalty to get out early and you can do partial redemptions.

Overall Equity allocation is still above 50%.

 

[bclover]

One Day, my bias admittedly is toward your viewpoint. I do not own CDs anymore, but up until a few years ago that was where my money was at. It is now not in common stocks either, but preferred utility stocks that yield 6% or so. Not recommending that to you, just admitting by bias leans your way.
I suspect some people glanced over your key points you mentioned later.... 1) Rental Income (mostly inflation protected income) 2) Frugality 3) Limited needs 4) Flexibility to cut spending.
Any decision has upsides and downsides to choices... But being a low cost of living rural person myself, and being around people like you I would make a substantial wager with anyone I could that the next 40 years you would do just fine doing what your initial thoughts are.
That doesn't mean of course that maybe you should not consider equities at some point. Its just I know "your type", been around them my entire life. And none of them are heading for homelessness under a bridge.
Its the ones that head into retirement NEEDING 7% market returns the rest of their life to make their retirement work are the ones I worry about.


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lol, naw we read all that but Op last sentence was asking an opinion? I love post that ask for opinions then when you give opinions opposite to what they plan on doing all along seem baffled.

I think op, had already made up his/her mind to invest in cd's all along and just wanted some sort of validation not opinions.

Her/his last sentence was "your thoughts"? If some one else ask me what to do with 3/4 of a million bucks they won't need for quite a number of years my answer will probably never be stick it in a cd.

 

[Mulligan]

lol, naw we read all that but Op last sentence was asking an opinion? I love post that ask for opinions then when you give opinions opposite to what they plan on doing all along seem baffled.

I think op, had already made up his/her mind to invest in cd's all along and just wanted some sort of validation not opinions.

Her/his last sentence was "your thoughts"? If some one else ask me what to do with 3/4 of a million bucks they won't need for quite a number of years my answer will probably never be stick it in a cd.

True, and no argument from me... You answered in the literal context of the question. After having read and knowing people like OP, I used the context of their situation and desire, to change the question more to... "Am I wrong to invest in CD's". Generally when asking for opinions, many usually have a general mindset, but will read to see if something can move them off their initial thoughts. Nothing wrong with that. I do it all the time. I ask for opinions with my mind mostly made up. If someones idea blows me away, I will change. If not, I stick with my initial inclination. Nothing wrong with thinking and then deciding to "stick with the plan".
But that also isn't an insult to other ideas that may be presented before final decision is ever made.


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[OneDay]

lol, naw we read all that but Op last sentence was asking an opinion? I love post that ask for opinions then when you give opinions opposite to what they plan on doing all along seem baffled.

I think op, had already made up his/her mind to invest in cd's all along and just wanted some sort of validation not opinions.

Her/his last sentence was "your thoughts"? If some one else ask me what to do with 3/4 of a million bucks they won't need for quite a number of years my answer will probably never be stick it in a cd.

I've acknowledged that I had my mind made up, sorry you didn't catch that. But I did change my mind, I posted earlier that I plan on putting $500k of it in CDs and $100k in to a vanguard utility fund and $100k in to Vanguard bond fund. So I did take some advice and as I've said before, thank you all for your input and yes I should have worded it different, have a good day.

 

[Car-Guy]

Wine, women and song.

I can't sing and I don't drink wine. Considering what is left on your list, one out of three is okay with me.