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Originally Posted by Baraka_Guru
This shouldn't prevent you from having much of that in fixed-income investments such as long-term and short-term bonds. $4m out of $5.5m in assets is rather high. That's nearly three quarters (75%) of your "portfolio" sitting in cash. What will you do if inflation runs amok? Your $4m could be decimated in one or two years. As a retired senior, it makes sense to have a low proportion of stocks, since there are few short-term benefits to holding them, but one benefit is that they protect your money from inflation.
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Then I shift. It'd be pretty easy to move money out of a savings account and into investments. I'm taking a pragmatic approach to the whole thing. Liquidity is important when you're only income is based on interest from savings and various investments. Should something happen to disappear that $1.5m, I need to be able to quickly move things around. Moving around investments is difficult. Moving around money in the bank is quick and easy. In other words, I wouldn't have to wait 1-2 years over the course of the inflation. I could move things around in a matter of days and not take a loss at all.
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Originally Posted by Baraka_Guru
Having that much cash sitting in a savings account will only earn you around $100,000/year. Your portfolio of $1.5m would reasonably earn you around $90,000 to $100,000/year. This is quite a bit shy of your desired $330,000/year. How did you do your math?
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I'm counting on the $5.5 total dwindling. It'd be nice to have enough to live on interest and earnings, but it may not be possible.
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Originally Posted by Baraka_Guru
10% cash, 25% stocks, 65% bonds |
I don't do debt security. When I say investments, I mean investing in something real, never stocks and never bonds. I'm much more likely to be investing in currency and goods. They're easier and I don't feel hypocritical for damning the stock and bond system while simultaneously using them. I only have Apple stocks now because I find it amusing.