I inherited a large sum of money and want to invest it safely to live off of, what would you do?

Question

I inherited just under $1.2 million and am planning on quitting my job and living on the interest from it. The problem is, I have no idea what investment strategy I should take or where I should begin? I would like to have a small portion invested in high risk to incur some growth over time, but for the most part I am merely looking for a safe annuity.

What is a realistic return I can expect for putting this money away safely. I was thinking even 9% earns over $100k a year which is all I would ever need and I could begin to travel etc.

What would you do, what do you recommend?

Answer 1

I would find a good financial advisor at a reputable financial company. He/she would be able to guide you in the development of a weighted portfolio that carries the level of risk you are comfortable with.

Enjoy!

Answer 2

What would I do? I can tell you without a doubt. You mention the word safety and annuities. Very smart. That is what I help people with every day. There are two types I would advise for you. First my question is what is your age? Second, what state do you reside in?
9% is a little high at this time in the interest rate world. We offer 6.5% and that is one of the best rates around. This is a fixed Annuity directly from an Insurance Co. Not a bank, broker, or financial planner. Why pay someone to manage your money when there is no managing when it comes to Fixed Annuities. Stay away from the Variable Annuities if you want safety.
The second Annuity that will give you unlimited growth, but no risk of loss is an Equity Indexed Annuity. This is based on the S & P 500 which averages about 13%. This would be a good place to put some of the money and let it grow over time.

Depending on your age, I would suggest living on the interest from the fixed until you are 60, (1 million) and then after the IRS penalty (extra 10% after 59 1/2) is not a factor and interest is higher, annuitize that policy and receive a large monthly income for the rest of your life. Meanwhile, you still have the other Equity Indexed Annuity to draw from if you want to take a trip, emergency, etc... I always recommend to keep a stash of "Mad Money" around $30k in the bank incase you get crazy and go on a spending spree. I would be honored to help you accomplish this. Very simple, but a great way to make your money work for you and not pay a dime to someone who would suggest you put it in the stock market and risk losing it.

Answer 3

Avoid investing in capital gains. e.g. stock market, mutual funds. Capital gains is anything that requires the sale of the investment to create a return. It is generally easy to get in and out of these investments. For exactly this reason, this is the area where most financial advisors operate in. They tell you to invest for the long term. Right now it is pretty good and has been for the last few years. Can you handle a 40% correction in the market like we did in 2000?

There are 3 things you need to invest in
1. Financial education - become investment savvy.
2. Real Estate
3. Businesses

The latter 2 have one thing in common. They both create cashflow i.e. they generate money without having to sell the asset. Learn how to acquire businesses and real estate. If the affairs are properly strucutured one can easily generate 10% to 15% cash on cash return with it increasing every year in the real estate business. By understanding the business (this is a learned skill) and real estate there are far too many things in buying real estate which lemon proofs your investment. For example:
1. When one buys a buildling one can have a look at the financials - the law requires that the current owner keeps at leat 5 to 7 years worth of financials. Form here one can see:
a. Revenue
b. Maintenance costs
c. Vacancy
2. The property can be inspected by a professional who can tell what future maintence will be required.
Which investment can one get that level of detail about the past returns and the future costs down the line.
The equation for monthly cash one can puts in ones pocket reads:
Cashflow = Revenue - Mortgage - Maintenance - Future Maintenance - Vacancy

I would strongly avoid letting others control your money. There is a strong correlation between risk and lack of control. Owning a business puts you squarly in control.

On a side note: Getting 9% in the stock market is aggressive. Bargain on an average of 6%. Most (over 80%) managed mutual funds (> 10000) underperform the market (index). If really want to invest in the stock market. Invest in index mutual funds. There are many great books on the topic e.g. The Four Pillars of Investsing - William Bernstein.

Answer 4

Neither hubby or I have any rich relatives so we won't inherit any money. That just leaves the lottery and we have to have a dream, don't we? If we don't have a dream, how we gonna have a dream come true? ha ha (Bloody Mary sang it from South Pacific, for those who wonder what I'm on about) Anyway, if we won the lottery, I think we would buy a bungalow in the same area we live at present. I am happy where I live but, in years to come, the stairs are going to become a pain I think. The only thing is, I will have to buy the next door bungalow too and persuade my friend/neighbour to move with us. I would buy a house for our daughter or she would get our existing house if she wanted it as it has a nice garden for her dog and a ready-built hutch for her 3 ferrets, ha ha. Then, I would book first-class aeroplane seats to Australia to visit my sister. Oh yes, and hubby could retire now. I should have put that at the top of the list.

Answer 5

Exxon Mobile Common Shares: If you would have bought these stocks 1 year ago this is the result

Purchase Date: December 30, 2005
Purchase Price:
(nominal) $56.17
Split Adjustment Factor: 1:1
Shares Owned Today:
(split adjusted) 21,363.72
Investment Value Today: $1,548,014.95
% Change: 29.00%


The energy stocks are a continued source of growth. As you probably know the company made billions last year the same is expected this year.

Answer 6

REAL ESTATE. Purchase several properties, some rental, some lots, that may be built on over time. Do PLENTY of research as to natural disasters and things like that. You could do a high yield cd or money market accts. Those would be the least risky. But that $$$ won't get you where it would have 10 years ago so I suggest you start a business, (addt'l research needed) to keep busy because if you are not busy you will blow that money way to fast.....look into dry cleaners and stuff like that. entrepreneur.com (however you spell it) has plenty of business ideas as well as expected start up investments. be shrewd.

Answer 7

Get free rates