$500K For 5 Years - Need %5/annum
OP sees this is a hostile thread lol.
TBH there is NO SAFE GUARANTEED WAY TO GET 5% without risk. N one knows what the market will do.
I agree with idea of buying funds that have the biggest American companies but just go with a Vanguard index fund S&p 500 OR TOTAL STOCK MARKET (INCLUDES 3K COMPANIES).
But there is NO guarantee. And I would on the safe side project out 10 yrs. So if I were you I would invest in cash for the 5 yrs and make sure you only invest in funds if you can live over 5 yrs on the cash investments.
Over the long haul you will generate about 7% in index fund(6-8). But the next bear market can come anytime within this period. The market has been artificially propped up by the gov't.
For this reason you want cash safety to get you though it so you don't sell and lose. You win if you buy and hold. Unless you can sell before it goes down.
Once interest rates go up many will flood out of the market and commodities. Even the Chinese will start buying up dollar assets again. The gov't knows this and is afraid for a market crash so times are unstable to invest hoping for a steady 5%...especially since you would be buying at top dollar now.
As for currency or commodity speculation..do so at your own risk but realize that the elites can pretty much win at that game since they keep their money in multiple currencies , and they even will use those currencies.. Regular people can't play the game that good. It is like playing lotto.
For a 53 yr old he is doing better than the majority but it isn't impossible. When I hear the term cashing out i think of someone getting out of their company 401k, stock or converting a define payment into a lump sum..not so uncommon.
TBH there is NO SAFE GUARANTEED WAY TO GET 5% without risk. N one knows what the market will do.
I agree with idea of buying funds that have the biggest American companies but just go with a Vanguard index fund S&p 500 OR TOTAL STOCK MARKET (INCLUDES 3K COMPANIES).
But there is NO guarantee. And I would on the safe side project out 10 yrs. So if I were you I would invest in cash for the 5 yrs and make sure you only invest in funds if you can live over 5 yrs on the cash investments.
Over the long haul you will generate about 7% in index fund(6-8). But the next bear market can come anytime within this period. The market has been artificially propped up by the gov't.
For this reason you want cash safety to get you though it so you don't sell and lose. You win if you buy and hold. Unless you can sell before it goes down.
Once interest rates go up many will flood out of the market and commodities. Even the Chinese will start buying up dollar assets again. The gov't knows this and is afraid for a market crash so times are unstable to invest hoping for a steady 5%...especially since you would be buying at top dollar now.
As for currency or commodity speculation..do so at your own risk but realize that the elites can pretty much win at that game since they keep their money in multiple currencies , and they even will use those currencies.. Regular people can't play the game that good. It is like playing lotto.
Quote:Quote:
Tons of people have 500k. Often when someone receives an estate assets are liquidated in order to pay the beneficiaries. The OP may have sold a house or property and now has that money available. It's not exactly an extreme amount of highly liquid funds for a middle-aged man to have. I'd avoid mutual funds like the plague.
For a 53 yr old he is doing better than the majority but it isn't impossible. When I hear the term cashing out i think of someone getting out of their company 401k, stock or converting a define payment into a lump sum..not so uncommon.
There's no secure way to make 5% a year right now, especially with a short time horizon like 5 years.
The secure investments like 4-5 year CDs are paying only near 2% right now. Bond funds like the Vanguard Total Bond market are paying 2.5% in dividends yearly and could go down in price if interest rates rise. Everyone is predicting rates to rise but they've been predicting them to rise for many years and it hasn't happened yet.
The original poster mention dividend paying stocks, but these are not at all secure. Dividends are basically no different than just selling a tiny amount of the stock without fees. If the dividend wasn't issued the stock price would be higher. Dividend stocks tend to skew toward certain characteristics (profitable companies, value stocks), but the dividend itself does not drive the excess returns, the other risk premiums associated with the company that correlate with dividends drive the excess returns.
The only options the original poster has is to realize risk exists and be comfortable with a longer time horizon for likely gains in risky assets or to take almost certain returns at a much lower rate.
In general if you want be more conservative and less risky you skew your assets more toward fixed income like CDs and bonds rather than equity but you get lower returns.
If you want to invest in equity on average index funds outperform actively managed mutual funds and also have lower expenses.
The secure investments like 4-5 year CDs are paying only near 2% right now. Bond funds like the Vanguard Total Bond market are paying 2.5% in dividends yearly and could go down in price if interest rates rise. Everyone is predicting rates to rise but they've been predicting them to rise for many years and it hasn't happened yet.
The original poster mention dividend paying stocks, but these are not at all secure. Dividends are basically no different than just selling a tiny amount of the stock without fees. If the dividend wasn't issued the stock price would be higher. Dividend stocks tend to skew toward certain characteristics (profitable companies, value stocks), but the dividend itself does not drive the excess returns, the other risk premiums associated with the company that correlate with dividends drive the excess returns.
The only options the original poster has is to realize risk exists and be comfortable with a longer time horizon for likely gains in risky assets or to take almost certain returns at a much lower rate.
In general if you want be more conservative and less risky you skew your assets more toward fixed income like CDs and bonds rather than equity but you get lower returns.
If you want to invest in equity on average index funds outperform actively managed mutual funds and also have lower expenses.
Personally I would consider doing a diversified portfolio where you just are touching the dividends for income and leaving the principle alone and do some type of part time or laid back easy job to make the difference in money that you want. Then when you are older like mid 60's cash out most of your investments and move them into an a annuity to get a guarantee payout each month.
For examples of a well diversified portfolio:
The gone fishin portfolio
![[Image: Gone-Fishing-Portfolio.png]](http://www.streetsmartfinance.org/wp-content/uploads/2012/12/Gone-Fishing-Portfolio.png)
This is the allocation of Ray Dalio's All weather fund
![[Image: all-weather-portfolio.jpg]](http://2zeobl3ojpj43evvq11p5yodq7e.wpengine.netdna-cdn.com/wp-content/uploads/all-weather-portfolio.jpg)
Or the Lazy portfolio of David Swensen
![[Image: Swensen_Lazy_Portfolio2.PNG]](http://www.bogleheads.org/w/images/a/ae/Swensen_Lazy_Portfolio2.PNG)
For examples of a well diversified portfolio:
The gone fishin portfolio
This is the allocation of Ray Dalio's All weather fund
Or the Lazy portfolio of David Swensen
Game/red pill article links
"Chicks dig power, men dig beauty, eggs are expensive, sperm is cheap, men are expendable, women are perishable." - Heartiste
Lots of solid wisdom here and I thank you guys for contributing - not so for the odious shit who came on here to accuse me of boasting.
As WWT or somebody correctly pointed out, 500K is not that much for a 48 year old guy who has been working in a decent paying job for 23 years and has a mortgage paid off. It should be a lot higher in fact. And being pretty good at saving and most critically never having had dependents allows you to build up some net worth but does not translate into any kind of investment acumen.
The essence is that %5/year is far from a cinch. I just read about Burton Malkiel a Prof Emeritus in eeconomics at Princeton who invests only in index funds except for some that he plays with outside of that for fun. I've ordered his book A Random Stroll Down Wall St. and I'm reading Graham's Intelligent Investor. %5/year for 5 years is a monumental goal that would also carry a price in stress I'm realizing if I tried to do it myself but yeah I'd like to avoid a fund.
Oh well I still have 18 months before this would happen so I'm going to continue reading thinking and planning.
As WWT or somebody correctly pointed out, 500K is not that much for a 48 year old guy who has been working in a decent paying job for 23 years and has a mortgage paid off. It should be a lot higher in fact. And being pretty good at saving and most critically never having had dependents allows you to build up some net worth but does not translate into any kind of investment acumen.
The essence is that %5/year is far from a cinch. I just read about Burton Malkiel a Prof Emeritus in eeconomics at Princeton who invests only in index funds except for some that he plays with outside of that for fun. I've ordered his book A Random Stroll Down Wall St. and I'm reading Graham's Intelligent Investor. %5/year for 5 years is a monumental goal that would also carry a price in stress I'm realizing if I tried to do it myself but yeah I'd like to avoid a fund.
Oh well I still have 18 months before this would happen so I'm going to continue reading thinking and planning.
If the OP is retiring in his 50s with just 500K assets and no other source of income no mqtter what his location he's looking at a really basic lifestyle from this point out.
« Next Oldest | Next Newest »
Users browsing this thread: 1 Guest(s)