How can I clear $40-60,000/yr with $1,000,000 cash... Low Risk?

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JoeRetire
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Re: How can I clear $40-60,000/yr with $1,000,000 cash... Low Risk?

Post by JoeRetire » Tue May 15, 2018 7:05 pm

MossySF wrote:
Tue May 15, 2018 5:19 pm
Fixed annuities are principle protected as long as you stick below the state-guarantee limits. So for $1M, you could open a fixed annuity in 4 different states. But whether the rates are 4% after-tax, I don't know.
I'm not sure you and the OP are using the term "principal protected" in the same way. I think the OP is saying "I don't want the principal to ever go away or be diminished at all".

In most annuities, the insurance company pays out the principal to the annuitant monthly. The principal is gradually diminished. Is that not the case in these 4 states?
And in these 4 states, if the annuitant dies, who gets the principal?

JoeRetire
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Re: How can I clear $40-60,000/yr with $1,000,000 cash... Low Risk?

Post by JoeRetire » Tue May 15, 2018 7:06 pm

Watty wrote:
Tue May 15, 2018 5:42 pm
One thing that has not been mentioned is that if you have a 4.5% mortgage then paying that off could in effect get you the return that you are looking for.
How does that provide an "annual return to supplement [the OP's] current retirement income." as required?

dknightd
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Re: How can I clear $40-60,000/yr with $1,000,000 cash... Low Risk?

Post by dknightd » Tue May 15, 2018 7:11 pm

slipp1229 wrote:
Mon May 14, 2018 11:21 pm
provide a Low Risk, Principle protected investment that would provide a 4-6% after tax, annual return to supplement my current retirement income.
me too :)

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Watty
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Re: How can I clear $40-60,000/yr with $1,000,000 cash... Low Risk?

Post by Watty » Tue May 15, 2018 7:49 pm

JoeRetire wrote:
Tue May 15, 2018 7:06 pm
Watty wrote:
Tue May 15, 2018 5:42 pm
One thing that has not been mentioned is that if you have a 4.5% mortgage then paying that off could in effect get you the return that you are looking for.
How does that provide an "annual return to supplement [the OP's] current retirement income." as required?
The money that was being used to pay the interest would be like retirement income.

The Wizard
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Re: How can I clear $40-60,000/yr with $1,000,000 cash... Low Risk?

Post by The Wizard » Tue May 15, 2018 8:09 pm

JoeRetire wrote:
Tue May 15, 2018 7:05 pm
MossySF wrote:
Tue May 15, 2018 5:19 pm
Fixed annuities are principle protected as long as you stick below the state-guarantee limits. So for $1M, you could open a fixed annuity in 4 different states. But whether the rates are 4% after-tax, I don't know.
I'm not sure you and the OP are using the term "principal protected" in the same way...
They are saying Principle protected, not the same as being Principal protected...
Attempted new signature...

michaeljc70
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Re: How can I clear $40-60,000/yr with $1,000,000 cash... Low Risk?

Post by michaeljc70 » Tue May 15, 2018 8:13 pm

jrbdmb wrote:
Tue May 15, 2018 10:06 am
RetireBy55 wrote:
Tue May 15, 2018 8:51 am
Come now, gang..I just saw an ad for Brighthouse Annuities on TV last night that promised "all of the market upside with NONE of the downside risk!". So, surely, the purple unicorn investment that the OP is talking about must indeed exist.

</sarc off>
Since Dave Ramsey constantly touts 12% annual returns on retirement funds, I'm sure he can recommend a 6-8% investment without risk. :twisted:
^^^^
This made me laugh.

michaeljc70
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Re: How can I clear $40-60,000/yr with $1,000,000 cash... Low Risk?

Post by michaeljc70 » Tue May 15, 2018 8:17 pm

I didn't read the whole thread. But my point is simple. Many people will not accept a 4% SWR given that studies have supported that. And that is with a 50/50 or higher AA. There is no way to get 4-6% "safely" after tax protecting principle. Unless your definition of "safely" is different than most people. You can get 4% BEFORE tax with a 50/50 AA in most cases, but that might sustain big drawdowns at points and I wouldn't call it "safe".

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MossySF
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Re: How can I clear $40-60,000/yr with $1,000,000 cash... Low Risk?

Post by MossySF » Wed May 16, 2018 1:57 am

JoeRetire wrote:
Tue May 15, 2018 7:05 pm
MossySF wrote:
Tue May 15, 2018 5:19 pm
Fixed annuities are principle protected as long as you stick below the state-guarantee limits. So for $1M, you could open a fixed annuity in 4 different states. But whether the rates are 4% after-tax, I don't know.
I'm not sure you and the OP are using the term "principal protected" in the same way. I think the OP is saying "I don't want the principal to ever go away or be diminished at all".

In most annuities, the insurance company pays out the principal to the annuitant monthly. The principal is gradually diminished. Is that not the case in these 4 states?
And in these 4 states, if the annuitant dies, who gets the principal?
The word annuity covers many different products. What you described are SPIAs -- Single Premium Immediate Annuities.

A "fixed annuity" is simply a CD offered by an insurance company instead of a bank. The difference is (1) you must be over 59.5 in order withdraw without tax penalties and (2) you don't get FDIC coverage but state insurance guaranty coverage. So this is why you'd have to open a fixed annuity in 4 different states to get 1M in state coverage because every state looks at your total insurance amounts versus each account. (E.g. FDIC lets you open in multiple banks which is much easier.) The rates are definitely higher than regular CDs due to these limitations -- last time I checked, it looked to be 2%-3% higher than similarly termed CDs but I'm not close to retirement age so they would make no sense for me.

wrongfunds
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Re: How can I clear $40-60,000/yr with $1,000,000 cash... Low Risk?

Post by wrongfunds » Wed May 16, 2018 12:55 pm

2%-3% higher than similarly termed CDs
So if similar termed CD is paying 2%, this "fixed annuity" will be paying 2.04-2.06%, correct? Or am I not interpreting your +2-3% incorrectly?

adamthesmythe
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Re: How can I clear $40-60,000/yr with $1,000,000 cash... Low Risk?

Post by adamthesmythe » Wed May 16, 2018 2:21 pm

In principle, OP could invest in bonds to protect his principal. But the principal problem is the low current yield of bonds.

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MossySF
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Re: How can I clear $40-60,000/yr with $1,000,000 cash... Low Risk?

Post by MossySF » Wed May 16, 2018 10:57 pm

wrongfunds wrote:
Wed May 16, 2018 12:55 pm
2%-3% higher than similarly termed CDs
So if similar termed CD is paying 2%, this "fixed annuity" will be paying 2.04-2.06%, correct? Or am I not interpreting your +2-3% incorrectly?
Yes, interpretation is wrong. Although the gap appears smaller now that rates have gone up -- some quick searches on the internet show the highest 5 year CDs is 2.75% -- while the highest paying 5yr FAs is 3.7%.

LFKB
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Re: How can I clear $40-60,000/yr with $1,000,000 cash... Low Risk?

Post by LFKB » Thu May 17, 2018 12:33 am

drk wrote:
Mon May 14, 2018 11:43 pm
slipp1229 wrote:
Mon May 14, 2018 11:21 pm
would like to take the cash and put it into a Short/Mid Term investment that would provide a Low Risk, Principle protected investment that would provide a 4-6% after tax, annual return to supplement my current retirement income.
This does not exist, and anyone offering it is trying to rip you off. That being said, if you're willing to take on moderate risk, you could come close with one of the following funds:
Most of those still wouldn’t work for OP because he/she wants 4-6% after tax (with NO risk to principal)

drk
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Re: How can I clear $40-60,000/yr with $1,000,000 cash... Low Risk?

Post by drk » Thu May 17, 2018 12:37 am

LFKB wrote:
Thu May 17, 2018 12:33 am
drk wrote:
Mon May 14, 2018 11:43 pm
This does not exist, and anyone offering it is trying to rip you off. That being said, if you're willing to take on moderate risk, you could come close with one of the following funds:
Most of those still wouldn’t work for OP because he/she wants 4-6% after tax (with NO risk to principal)
Again, none of those would work because what the OP is looking for does not exist.

sco
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Re: How can I clear $40-60,000/yr with $1,000,000 cash... Low Risk?

Post by sco » Thu May 17, 2018 12:42 am

drk wrote:
Thu May 17, 2018 12:37 am
LFKB wrote:
Thu May 17, 2018 12:33 am
drk wrote:
Mon May 14, 2018 11:43 pm
This does not exist, and anyone offering it is trying to rip you off. That being said, if you're willing to take on moderate risk, you could come close with one of the following funds:
Most of those still wouldn’t work for OP because he/she wants 4-6% after tax (with NO risk to principal)
Again, none of those would work because what the OP is looking for does not exist.
When you do find what the OP is looking for... Would someone find me 10-12% without risk? Just PM me, no need to post it... Thanks!

bberris
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Re: How can I clear $40-60,000/yr with $1,000,000 cash... Low Risk?

Post by bberris » Fri May 18, 2018 9:25 am

NS_Bane wrote:
Tue May 15, 2018 9:40 pm
Excellent troll, OP.
I don't think so. He seems earnest. There are lots of threads where people believe that they can achieve the unlikely or the impossible if only they find the right advisor or newsletter, or mutual fund, and that is on Bogleheads! You know, the ones who have a strategy: buy low, sell high. In the general population of investors, such beliefs are even more widespread.

dbr
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Re: How can I clear $40-60,000/yr with $1,000,000 cash... Low Risk?

Post by dbr » Fri May 18, 2018 9:36 am

bberris wrote:
Fri May 18, 2018 9:25 am
NS_Bane wrote:
Tue May 15, 2018 9:40 pm
Excellent troll, OP.
I don't think so. He seems earnest. There are lots of threads where people believe that they can achieve the unlikely or the impossible if only they find the right advisor or newsletter, or mutual fund, and that is on Bogleheads! You know, the ones who have a strategy: buy low, sell high. In the general population of investors, such beliefs are even more widespread.
It is a perfectly reasonable question which only seems strange here now because the interest rates you would need on CDs or similar investments aren't available at the moment. Heck, at one point I owned ten year CDs yielding over 10%. The OP could have had $100,000/year low risk had he been asking then. As recently as ten years ago one could have gotten 5% on a Treasury Bond or a CD, aka $50,000/year. Right now you can get $30,000 a year or more, which is not ridiculously short of $40,000.

boglewill34
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Re: How can I clear $40-60,000/yr with $1,000,000 cash... Low Risk?

Post by boglewill34 » Fri May 18, 2018 9:59 am

dbr wrote:
Fri May 18, 2018 9:36 am
bberris wrote:
Fri May 18, 2018 9:25 am
NS_Bane wrote:
Tue May 15, 2018 9:40 pm
Excellent troll, OP.
I don't think so. He seems earnest. There are lots of threads where people believe that they can achieve the unlikely or the impossible if only they find the right advisor or newsletter, or mutual fund, and that is on Bogleheads! You know, the ones who have a strategy: buy low, sell high. In the general population of investors, such beliefs are even more widespread.
It is a perfectly reasonable question which only seems strange here now because the interest rates you would need on CDs or similar investments aren't available at the moment. Heck, at one point I owned ten year CDs yielding over 10%. The OP could have had $100,000/year low risk had he been asking then. As recently as ten years ago one could have gotten 5% on a Treasury Bond or a CD, aka $50,000/year. Right now you can get $30,000 a year or more, which is not ridiculously short of $40,000.
So what OP is really asking is how to get 2% real?

dbr
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Re: How can I clear $40-60,000/yr with $1,000,000 cash... Low Risk?

Post by dbr » Fri May 18, 2018 10:08 am

boglewill34 wrote:
Fri May 18, 2018 9:59 am
dbr wrote:
Fri May 18, 2018 9:36 am
bberris wrote:
Fri May 18, 2018 9:25 am
NS_Bane wrote:
Tue May 15, 2018 9:40 pm
Excellent troll, OP.
I don't think so. He seems earnest. There are lots of threads where people believe that they can achieve the unlikely or the impossible if only they find the right advisor or newsletter, or mutual fund, and that is on Bogleheads! You know, the ones who have a strategy: buy low, sell high. In the general population of investors, such beliefs are even more widespread.
It is a perfectly reasonable question which only seems strange here now because the interest rates you would need on CDs or similar investments aren't available at the moment. Heck, at one point I owned ten year CDs yielding over 10%. The OP could have had $100,000/year low risk had he been asking then. As recently as ten years ago one could have gotten 5% on a Treasury Bond or a CD, aka $50,000/year. Right now you can get $30,000 a year or more, which is not ridiculously short of $40,000.
So what OP is really asking is how to get 2% real?
Who knows? Inflation was not brought up. But historically 2% real has existed over many time periods. TIPS paying 2% real and indexed for inflation have certainly been available. The OP is mostly just unlucky to want those kinds of numbers now.

WhiteMaxima
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Re: How can I clear $40-60,000/yr with $1,000,000 cash... Low Risk?

Post by WhiteMaxima » Fri May 18, 2018 12:16 pm

slipp1229 wrote:
Mon May 14, 2018 11:21 pm
Hello
Thanks in advance for experienced BH's advice/opinions!
Without going into explicit detail of my total financial picture ... I want to purposely keep this post simple and to the point & purpose.
I do have other funds invested per common BH guidelines ... I'm not concerned about these. I have purposely kept $1,000,000 on the sidelines in MM fund accounts waiting for the next " 2008 crash". I know .. stupid me. Moving on now, and would like to take the cash and put it into a Short/Mid Term investment that would provide a Low Risk, Principle protected investment that would provide a 4-6% after tax, annual return to supplement my current retirement income. I'm thinking a laddered bond approach? ... but would REALLY appreciate other BH's who were/are in a similar financial situation's feedback.
Again, Thanks
Slipp
25/25/25/25 Total Equity/Total Bond/Total Real Asset (gold, real estate)/Total Cash, and you will be good in any market environment. And you can do it today, no need to wait 2008 happen again.

MathWizard
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Re: How can I clear $40-60,000/yr with $1,000,000 cash... Low Risk?

Post by MathWizard » Fri May 18, 2018 4:54 pm

Assuming 4 to 6% real return, you can't.

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Re: How can I clear $40-60,000/yr with $1,000,000 cash... Low Risk?

Post by LadyGeek » Sat May 19, 2018 7:48 am

I removed an off-topic post. As a reminder, see: General Etiquette
We expect this forum to be a place where people can feel comfortable asking questions and where debates and discussions are conducted in civil tones.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

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Re: How can I clear $40-60,000/yr with $1,000,000 cash... Low Risk?

Post by LadyGeek » Sat May 19, 2018 8:04 am

slipp1229 - In order to give appropriate advice, it's best to keep all the information in one spot. Normally, I'd merge this discussion into your original question here: Funding VG Roth IRA using VG Money Mkt Funds?

I recommend you post your portfolio in that thread using the Asking Portfolio Questions format. It will make you think about the "big picture" while giving us the information we need to point you in the right direction.

Without a complete picture, continuing the discussion will not be productive. This thread is locked to continue the discussion in the thread I just referenced.
slipp1229 wrote:
Mon May 14, 2018 11:21 pm
Hello
Thanks in advance for experienced BH's advice/opinions!
Without going into explicit detail of my total financial picture ... I want to purposely keep this post simple and to the point & purpose.
I do have other funds invested per common BH guidelines ... I'm not concerned about these...
I understand the concern about not posting personal financial info. Consider that we don't know who you are or where you live. Having an accurate picture of your finances is the only way to assure that you'll get the answers you need.

This is your life's savings, it's important to get right. You don't need the exact amounts, but close enough to be "ball park".
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

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