How in Invest $1 million

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DesertInvestor
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How in Invest $1 million

Post by DesertInvestor » Sat Mar 03, 2018 9:02 pm

How would you invest a $1 million dollar windfall? I'm in my late thirties and staying on as a highly payed employee, but will pocket over $1 mil in windfall. I'm interested in investing perhaps 50% of it in real estate, but deals difficult to find (thinking a combo of turn key Single family homes and crowdfunding). The other 50% possibly in Vanguard Tax-Managed Capital Appreciation Fund Admiral Shares and Vanguard Total international Index fund. Any opinion? Other ideas? I don't want to miss and opportunity to jump start my retirement.

Thank you!
Last edited by DesertInvestor on Sat Mar 03, 2018 9:20 pm, edited 1 time in total.

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Wildebeest
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Re: How in Invest $1 million

Post by Wildebeest » Sat Mar 03, 2018 9:20 pm

When I was in my thirties, I would have loved a million dollar windfall. However when I was in my thirties, luck and good graces were wasted on me and it is arguable that at my age nothing has changed.

If you will keep your day job, I would suggest to invest it all in an all world index fund. If you feel conservative you may go for Wellington. If you feel lucky, go for Small Value international.

I seriously considered real estate when I got lucky and for me it seemed a lot of work and a lot of risk for no better returns than rolling the dice in the stock market.
The Golden Rule: One should treat others as one would like others to treat oneself.

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Sandtrap
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Location: Hawaii😀 Northern AZ.😳 Retired.

Re: How in Invest $1 million

Post by Sandtrap » Sat Mar 03, 2018 9:20 pm

DesertInvestor wrote:
Sat Mar 03, 2018 9:02 pm
How would you invest a $1 million dollar windfall? I'm in my late thirties and staying on as a highly payed employee, but will pocket over $1 mil in windfall. I'm interested in investing perhaps 50% of it in real estate, but deals difficult to find (thinking a combo of turn key Single family homes and crowdfunding). The other 50% possibly in Vanguard Tax-Managed Capital Appreciation Fund Admiral Shares andAny Total international Index fund. Any opinion? Other ideas? I don't want to miss and opportunity to jump start my retirement.

Thank you!
Welcome :D
1
Stop. Read.
MANAGING A WINDFALL
https://www.bogleheads.org/wiki/Managing_a_windfall
2
Crowdfunding - No
R/E - Not if that is your expertise. You mention SFH and crowdfunding which indicates R/E is perhaps not your profession nor expertise as of yet.

Suggest Rinse and Repeat Item #1
Suggest doing nothing and telling nobody.
There is a temptation to "do something". Don't.

Instead. Read and learn.
Do nothing until you absorb the following.

GETTING STARTED
https://www.bogleheads.org/wiki/Getting_started
Asking Portfolio Questions
https://www.bogleheads.org/forum/viewt ... =1&t=6212
Bogle Philosophy
https://www.bogleheads.org/wiki/Bogleh ... hilosophy
Here are links to the wiki's "Getting Started" and "Investing Startup Kit" pages:
https://www.bogleheads.org/wiki/Getting_started
https://www.bogleheads.org/wiki/Bogleh ... rt-up_kit
Define General Investment Goals and Objectives (what is your plan?)
https://www.bogleheads.org/wiki/Invest ... statement
Outline of Investing
https://www.bogleheads.org/wiki/Outline_of_investing
Outline of Financial Planning (with links)
https://www.bogleheads.org/wiki/Outlin ... _planning
Funding Priority (what do I do first?)
https://www.bogleheads.org/wiki/Priori ... vestments
Tax Efficient Fund Placement
https://www.bogleheads.org/wiki/Tax-ef ... _placement
Asset allocation in multiple accounts
https://www.bogleheads.org/wiki/Asset ... accounts
Risk Tolerance (what is your "sleep factor"?)
https://www.bogleheads.org/wiki/Risk_tolerance
Asset Allocation (what is right for you?)
https://www.bogleheads.org/wiki/Asset_allocation
Emergency Fund
https://www.bogleheads.org/wiki/Emergency_fund

Suggested Reading List (buy and read all of them)
https://www.bogleheads.org/RecommendedReading.php
Forum Library of Investing Advice with links
https://www.bogleheads.org/wiki/Main_Page

Free Reading: "If You Can" by Bernstein
https://www.google.com/url?sa=t&rct=j& ... -SB3S580I5

There are financial and personal "black swans". Read the following to help avoid the latter.
"Life Code" by Dr. Phil. (especially read about "Baiters".
https://www.amazon.com/Life-Code-Rules- ... il+baiters

Good luck in your efforts.
j :D
Last edited by Sandtrap on Sat Mar 03, 2018 9:36 pm, edited 1 time in total.

DesertInvestor
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Re: How in Invest $1 million

Post by DesertInvestor » Sat Mar 03, 2018 9:28 pm

Thank you!

I've read most of the posts and books. In my retirement accounts I do a three fund strategy of 80/20 stock to bond and wish to continue with as simple a portfolio as possible. I like idea of one all world index fund for the post tax account.

I own a couple of rentals currently, just looking to diversify a bit outside of the market and get some tax advantaged passive income.

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Sandtrap
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Location: Hawaii😀 Northern AZ.😳 Retired.

Re: How in Invest $1 million

Post by Sandtrap » Sat Mar 03, 2018 9:53 pm

DesertInvestor wrote:
Sat Mar 03, 2018 9:28 pm
Thank you!

I've read most of the posts and books. In my retirement accounts I do a three fund strategy of 80/20 stock to bond and wish to continue with as simple a portfolio as possible. I like idea of one all world index fund for the post tax account.

I own a couple of rentals currently, just looking to diversify a bit outside of the market and get some tax advantaged passive income.
Outstanding!
:D

DesertInvestor
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Re: How in Invest $1 million

Post by DesertInvestor » Sat Mar 03, 2018 10:11 pm

I am far too cash heavy in post tax account. Would you lump sum into vanguard global equity or total world index fund?

401k and Roth Accounts currently 80/20 (20% Vanguard total bond market index and 80% stocks with split of 60% US total mkt index and 40% Total International mkt Index).

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Tyler Aspect
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Re: How in Invest $1 million

Post by Tyler Aspect » Sat Mar 03, 2018 10:47 pm

DesertInvestor wrote:
Sat Mar 03, 2018 10:11 pm
I am far too cash heavy in post tax account. Would you lump sum into vanguard global equity or total world index fund?

401k and Roth Accounts currently 80/20 (20% Vanguard total bond market index and 80% stocks with split of 60% US total mkt index and 40% Total International mkt Index).
One possibility is to pay off commercial property loans.

Tax managed capital appreciation, and total international stock index are good taxable fund choices.

Change 401k and Roth IRA accounts to all bonds; would it make the entire portfolio to 70% stock / 30% bond?
Past result does not predict future performance. Mentioned investments may lose money. Contents are presented "AS IS" and any implied suitability for a particular purpose are disclaimed.

DesertInvestor
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Re: How in Invest $1 million

Post by DesertInvestor » Sat Mar 03, 2018 11:34 pm

Could do that. Assuming you think overall portfolio of 80/20 too aggressive for someone in late 30s.

What percentage of real estate would you do if any? I'm not a fan of REITs honestly as they correlate with market pretty closely.

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randomizer
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Re: How in Invest $1 million

Post by randomizer » Sun Mar 04, 2018 1:53 am

I'd invest it according to my AA (75% stock, 25% bonds) and then basically forget about it.
87.5:12.5, EM tilt — HODL the course!

inbox788
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Re: How in Invest $1 million

Post by inbox788 » Sun Mar 04, 2018 3:42 am

Begin by opening up 4 savings accounts:

Marcus by Goldman Sachs
Barclays
Synchrony+Bank
CIT Bank Premier High Yield Savings

Put 250k in each and collect $10/day/account while you figure out your next step. Take your time and don't rush into something you'll later regret.

As others have suggested: https://www.bogleheads.org/wiki/Managing_a_windfall

WanderingDoc
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Re: How in Invest $1 million

Post by WanderingDoc » Sun Mar 04, 2018 4:08 am

DesertInvestor wrote:
Sat Mar 03, 2018 9:02 pm
How would you invest a $1 million dollar windfall? I'm in my late thirties and staying on as a highly payed employee, but will pocket over $1 mil in windfall. I'm interested in investing perhaps 50% of it in real estate, but deals difficult to find (thinking a combo of turn key Single family homes and crowdfunding). The other 50% possibly in Vanguard Tax-Managed Capital Appreciation Fund Admiral Shares and Vanguard Total international Index fund. Any opinion? Other ideas? I don't want to miss and opportunity to jump start my retirement.

Thank you!
I would invest 80% in real estate (hand selected SFHs and condos, maybe 1 Turnkey, syndicated or individual apartment deal, and partnerships), 10% equities, and leave 10% cash.

Real estate is the gift that keeps on giving. And rental real estate has the BEST tax treatment out of any asset I know. Plus you'll enjoy an easy 10-15% annual cash flow. Good luck getting that with stocks.

The equity markets are overheated and not based in fundamentals. See my sig and congrats! :beer
Last edited by WanderingDoc on Sun Mar 04, 2018 4:13 am, edited 1 time in total.
Don't wait to buy real estate. Buy real estate, and wait. | Rent where you live, buy where others pay your mortgage for you.

WanderingDoc
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Re: How in Invest $1 million

Post by WanderingDoc » Sun Mar 04, 2018 4:12 am

randomizer wrote:
Sun Mar 04, 2018 1:53 am
I'd invest it according to my AA (75% stock, 25% bonds) and then basically forget about it.
The OP said he/she wanted passive income. Last I checked, the S&P averaged a paltry 1.75% dividend. Thats not income, that doesn't even beat inflation.

Also, I forgot to mention. Stay away from REITs. Returns are too low, you lose all control, and lose most of the advantages of actual real estate investment.
Don't wait to buy real estate. Buy real estate, and wait. | Rent where you live, buy where others pay your mortgage for you.

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randomizer
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Re: How in Invest $1 million

Post by randomizer » Mon Mar 05, 2018 12:12 pm

WanderingDoc wrote:
Sun Mar 04, 2018 4:12 am
randomizer wrote:
Sun Mar 04, 2018 1:53 am
I'd invest it according to my AA (75% stock, 25% bonds) and then basically forget about it.
The OP said he/she wanted passive income. Last I checked, the S&P averaged a paltry 1.75% dividend. Thats not income, that doesn't even beat inflation.

Also, I forgot to mention. Stay away from REITs. Returns are too low, you lose all control, and lose most of the advantages of actual real estate investment.
Dividend income is effectively equivalent to selling stock (this is why the price goes down when dividends are paid out), so if the dividend seems paltry, feel free to sell more. (In fact, for this reason, many prefer stocks which pay less or no dividend, because then they get to choose when to liquidate instead of having the company board decide.)

Owning real estate is far from a passive investment. It's actually a lot of work. (Not saying it's a bad strategy just because it involves work, but people should be aware what they're getting in to.) My main other concern with it is the difficulty of diversifying — it's just too easy to become geographically concentrated compared to what you can achieve with an index fund.
87.5:12.5, EM tilt — HODL the course!

WanderingDoc
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Re: How in Invest $1 million

Post by WanderingDoc » Tue Mar 06, 2018 1:22 am

randomizer wrote:
Mon Mar 05, 2018 12:12 pm
WanderingDoc wrote:
Sun Mar 04, 2018 4:12 am
randomizer wrote:
Sun Mar 04, 2018 1:53 am
I'd invest it according to my AA (75% stock, 25% bonds) and then basically forget about it.
The OP said he/she wanted passive income. Last I checked, the S&P averaged a paltry 1.75% dividend. Thats not income, that doesn't even beat inflation.

Also, I forgot to mention. Stay away from REITs. Returns are too low, you lose all control, and lose most of the advantages of actual real estate investment.
Dividend income is effectively equivalent to selling stock (this is why the price goes down when dividends are paid out), so if the dividend seems paltry, feel free to sell more. (In fact, for this reason, many prefer stocks which pay less or no dividend, because then they get to choose when to liquidate instead of having the company board decide.)

Owning real estate is far from a passive investment. It's actually a lot of work. (Not saying it's a bad strategy just because it involves work, but people should be aware what they're getting in to.) My main other concern with it is the difficulty of diversifying — it's just too easy to become geographically concentrated compared to what you can achieve with an index fund.
Hmm... maybe. If I sell stock, I have to pay taxes, or wait until I am old or dead in the case of "tax-deferred accounts" (and pay tax on the traditional contributions). All not good choices. Real estate income is realized NOW, and you would legally pay little to no taxes on this income. Also, if you want to sell you can sell with no tax (homestead) or 1031 exchange into a larger asset which produces income. Win-win each time.
Don't wait to buy real estate. Buy real estate, and wait. | Rent where you live, buy where others pay your mortgage for you.

remomnyc
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Re: How in Invest $1 million

Post by remomnyc » Tue Mar 06, 2018 7:47 am

You wrote that your retirement fund is 80/20. Fill your entire 401k with your bond allocation. Your windfall in taxable can go all stocks unless you need to buy more bonds for your 80/20 allocation. No to crowd funding, real estate, and REITs. Keep it simple.

aristotelian
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Re: How in Invest $1 million

Post by aristotelian » Tue Mar 06, 2018 8:01 am

Read the windfall wiki and don't do anything impulsive. Consider whether this windfall might change your need, willingness and ability to take risk. You have more ability to take risk, but less need. Personally, I would shift to a more conservative allocation as my IPS states I should not take unnecessary risk.

gotester2000
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Re: How in Invest $1 million

Post by gotester2000 » Tue Mar 06, 2018 8:09 am

DesertInvestor,

If you have a paid off home to stay I would suggest this AA -

50% real estate - good rent producing, look for commercial.

30% stocks - index and direct stock combination

20% cash

I hope you have good education which can provide you decent work. Age is on your side so dont be ultra conservative. Your aim should be to have the cake and eat it too - no use waiting for 10 million at 60 and living in misery.

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