Inheritance Investing Advice

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pocketplayer
Posts: 66
Joined: Sat Feb 19, 2011 8:34 am

Inheritance Investing Advice

Post by pocketplayer » Mon Mar 20, 2017 4:53 pm

Hi Bogleheads!

I have shared previously I was working overseas and came back to the states to care for my
father after my mom passed. I took most of my saving in Vanguard and retirement and
put in money market. I shifted everything into Vanguard and almost all is in money market
right now due to a lot of personal instability and the need for cash.

Up until the last two years, I have been dollar cost averaging into my 403b, Roth IRA,
and Vanguard Total Stock Market with any extra money living well below means.

I am about to inherit approximately $500k. I am not working right now and do not want
to go back into the classroom at age 54. I am seeking advice on investing this money
to live off of with the supplement of either a part-time job or full-time that most likely
will not pay more than $30k a year. I want to move to a more rural area and like a small
farm lifestyle (chickens, goats, dogs).

Just seeking options on this inheritance over a CD. I'd like to get ideally a 5% return
if possible. I have read through the 3 and 4 portfolio thread(s) and believe in this.
I used to have this for many years until I went into money markets.

Hope to get some advise. Thanks.

aristotelian
Posts: 2782
Joined: Wed Jan 11, 2017 8:05 pm

Re: Inheritance Investing Advice

Post by aristotelian » Mon Mar 20, 2017 4:59 pm

Sorry for your loss.

Pretend you are retired, because, in effect, you are. Conservative asset allocation, sustainable withdrawal rate.

Try to earn some income so you can keep up contributions to your retirement accounts.

Exact investments and withdrawal plan would depend on the rest of your portfolio and how much income you anticipate needing.

Dottie57
Posts: 2091
Joined: Thu May 19, 2016 5:43 pm

Re: Inheritance Investing Advice

Post by Dottie57 » Mon Mar 20, 2017 5:06 pm

pocketplayer wrote:Hi Bogleheads!

I have shared previously I was working overseas and came back to the states to care for my
father after my mom passed. I took most of my saving in Vanguard and retirement and
put in money market. I shifted everything into Vanguard and almost all is in money market
right now due to a lot of personal instability and the need for cash.

Up until the last two years, I have been dollar cost averaging into my 403b, Roth IRA,
and Vanguard Total Stock Market with any extra money living well below means.

I am about to inherit approximately $500k. I am not working right now and do not want
to go back into the classroom at age 54. I am seeking advice on investing this money
to live off of with the supplement of either a part-time job or full-time that most likely
will not pay more than $30k a year. I want to move to a more rural area and like a small
farm lifestyle (chickens, goats, dogs).

Just seeking options on this inheritance over a CD. I'd like to get ideally a 5% return
if possible. I have read through the 3 and 4 portfolio thread(s) and believe in this.
I used to have this for many years until I went into money markets.

Hope to get some advise. Thanks.


The big question is how much income do you need? What are your expenses? Are you willing to spend principle?
How much risk. 5% is very rich without taking risk.

Yardbird
Posts: 1
Joined: Mon Mar 20, 2017 5:05 pm

Re: Inheritance Investing Advice

Post by Yardbird » Mon Mar 20, 2017 5:17 pm

As far as moving to a rural area and raising chickens is concerned; this is an attractive lifestyle, but not an economical one. First there's the cost of buying property in a nice location; second, being an amateur farmer is very expensive. I spend 10 times more on my small garden than what I would pay for the same vegetables at the store. I recommend a location like Salt Lake City, which is not too expensive, and the mountains are right here when you want to enjoy nature.

As for investments, REITs should be at the top of your list. Vanguard's VNQ is a great choice.
I also like preferred stock CEFs, like PDT, DFP.
Mortgage CEFs, PDI, DMO
Covered call CEFs, like ETV.
Corporate bond fund, PONDX
MLP ETFs like EMLP, MLPA, or AMZA

At this moment however, (3/20/17) almost everything is very expensive. I would wait for more attractive prices.

Good luck! and Enjoy!

delamer
Posts: 2882
Joined: Tue Feb 08, 2011 6:13 pm

Re: Inheritance Investing Advice

Post by delamer » Mon Mar 20, 2017 5:42 pm

If you are looking for 5% in income (interest and dividends), that is probably not realistic over time. If you mean that you are looking for a total return (including capital appreciation) of 5%, then look at this table:

https://personal.vanguard.com/us/insigh ... llocations

And the rule of thumb is that you shouldn't spend more than 3%-4% (inflation adjusted) of your initial portfolio value.

How are you going to handle health care, now and in the future? Are you going to be eligible for Social Security and Medicare?

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Watty
Posts: 11307
Joined: Wed Oct 10, 2007 3:55 pm

Re: Inheritance Investing Advice

Post by Watty » Mon Mar 20, 2017 6:02 pm

One issue with having worked overseas is that you may have very small Social Security benefit and it takes about ten years of working and paying into Medicare in order to get Medicare when you are 65 so it would be good to research that to see who you stand with Social Security and Medicare.

You will get better responses if you post more of your information in this suggested format.

viewtopic.php?f=1&t=6212

It does not need to follow that exactly but it would be good to use that as a guideline.

pocketplayer
Posts: 66
Joined: Sat Feb 19, 2011 8:34 am

Re: Inheritance Investing Advice

Post by pocketplayer » Tue Mar 21, 2017 12:27 am

Man I love Bogleheads! Salient, wise advise.

I have always been very disciplined with investing. The emotional part of losing a parent
overseas was rough enough, but the after impact was devastating. Never been close to my
father so I gave up a very good salary (for an educator living tax-free w/no housing costs)
to try and connect with my dad before he passes. He is 90 and not doing well. Time is ticking.

I HIGHLY do not advise moving in with a parent for a long-term period without a place to establish
healthy boundaries! For those who had a good relationship with their dad/parents...you are very blessed!
To those who understand alcoholism or "dry alcoholic" well, you get abandonment and trying to find
some connection from someone who just is not capable. Humbling all-around!

Enough of the backstory...all to say I lost my work connections in this transition and have done some
deep soul searching. I hate living in So Cal. I am a strong conservative. I have done small farming...
and what I desire is very small farming like 5 chickens and some dogs...I do love goats for some reason.
I am good with a mobile home or cheap living alternative and want to go off-grid as much as possible.
Most think this is living in some wilderness like some guys on Youtube...that is one way to go, I am
not going that route, but plan on spending no more than $100k for a place to live. I have cash for that
right now.

The "inheritance" is something that just came up. So I want to invest it wisely and live off some of it
if possible. I do not know how to diversify this as of yet. I only need $25k a year to live on. I will
have no housing payment, am not a "things" person, and only need a car. As for health care, in CA
I have no costs right now and full coverage. That might change elsewhere. I have looked into plans
for this out of pocket and it ranges from $2500-$$6500 a year. I have no family to worry about right
now of my own. Health care per state (most likely I will move to WA or TN) has some kind of benefits
for low income.

Using the template from this site, my portfolio looks as follows;
Emergency funds: $21,312.31
Tax Rate: 0 (unemployed)
State of Residence: CA
Age: 54
Desired Asset allocation: not sure
Desired International allocation: not sure

Current retirement assets
VANGUARD
* Money Market: $21,312.31
* Rollover IRA (former 403b): $77,570.36
* Roth IRA: $14,314.45
Vanguard Total assets $113,197.12
(I moved both my 403b from American Funds and Roth IRA from Franklin Funds to Vanguard last year)

CALSTRS
Total Contributions + Interest: $35,603.64

aristotelian
Posts: 2782
Joined: Wed Jan 11, 2017 8:05 pm

Re: Inheritance Investing Advice

Post by aristotelian » Tue Mar 21, 2017 6:25 am

Do you know what the inheritance is invested in yet? Is it in an IRA?

pocketplayer
Posts: 66
Joined: Sat Feb 19, 2011 8:34 am

Re: Inheritance Investing Advice

Post by pocketplayer » Tue Mar 21, 2017 11:49 am

The 90% of the inheritance is based on the sale of a house. If my dad passed tomorrow,
the house is to be sold within six months which I why I want a plan because I will have
to move and am trying to prepare to think now when I will be hit with a lot of emotions.
My sibling and I do not see eye-to-eye, so it will be a very difficult time of life. I'm
pretty stressed right now with 24/7 care-taking...if this goes on much longer, I will
and have suggested getting some help. Nobody knows the future, but this is what the
story looks like right now.

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