Windfall at 40.5

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
sf_tech_saver
Posts: 21
Joined: Sat Sep 08, 2018 9:03 pm

Windfall at 40.5

Post by sf_tech_saver » Sat Sep 08, 2018 10:12 pm

Hi,

First, thank you everyone for this awesome forum. I'm relatively new to investing outside of a 401k, and reading many threads here has helped build my confidence. :D

Some large stock grants are about to be sellable and I've been reading up to prepare to invest/save it smartly. I'm also thinking about changing jobs (to -- TBD) next year which factors into my equation.

Here is the outline of my situation:

40 years old, wife 35. Live in SF CA, high tax high country, high COL...

Household:
--Rent $5k/month
--$700k/year salary + bonus between wife and I (sometimes higher but conservatively)
--Me 500, Wife 200 in round numbers
--No debt
--Top tax bracket for both Federal and CA (we pay $15-20k extra a year to be married!)

Retirement:
~$750k across my wife/my 401k. Invested in Vanguard 2045, so roughly 90/10 stocks/bonds. We max both of our yearly allotments.

After Tax (other than checking):
-$50k Goldman marcus savings at 1.8%
-$100k Goldman Marcus CD at 2.4%
-$275k invested into Wealthfront at a 4/10 risk ratio so roughly 60/40 stocks and lower tax bond mix. This was a medium term savings account to accumulate a down payment on a condo in case our company stock didn't perform above my options.
--$60k in last company stock options that I don't want to sell now because of tax rates

About to vest/cliff of NQSO/options:

November:
$8.5M

Each month after through July:
-$100-200K vest
~$1.5M current total

Like many high multiple tech company stocks I factor in at least 20-30% variability into my shares by the time they are sold but they have held around this price for a few months now. But, always TBD...

****
For us I think this qualifies as a windfall. I read the windfall section and it was very helpful.

Lots of wealth management firms have taken me to coffee but I can't find much value in them beyond what Schwab will already provide me based on my company stock assets. The two big Schwab benefits are mortgage discounts and white glove service; lending against equity if needed. I don't think I want to pay a .75%-1% fee for private banking beyond that.

Goals:
--Buy a bigger condo than we currently rent to make space for new kiddo
--Conservative investments during windfall adjustment period and to allow flexibility-- I may want to change jobs to a startup with more equity focused comp.
--Transition after windfall period to a 3 fund style mix, potentially as aggressive as 90/10 or 80/20 if I continue to have a high salary role or more 60/40 if I take something with more risk
--Laziest possible portfolio as I don't want to over managed it....I've been researching hours a day and I don't want to keep that up :|

Plan for next year:

--Buying a condo in the ~$2M range. While SF condo prices are high we plan to stay in the area and work here next 10 years + so seems like a cost of doing business. Some nicer condos get into the $2.5M-$3.0M range but wouldn't that would overly invest us in real estate?

--Finance condo with $750k interest only loan at %3.8. Goal is to simply keep the max tax benefits going on the condo. The rest I'd pay cash with the first tranche of sold equities. Let's say that's $1.2M in cash. Paying this much down helps on interest rates s as well from Schwab.

--As I sell off equity I'd place it immediately into the Vanguard Tax Free California money market fund and direct it from there-- 1.3% yield. (VCTXX)

--Plan is to sell equity as quickly as possible, but daily volume averages here mean I can't just place this all in one big 'market' order and walk. Will start talking to schwab about how to do this.

Tranches as I sell:

--First $1.2M -- Condo with the rest in interest only loan for max tax benefit.

--Next $1M into VCLAX, Vanguard's long term municipals tax free fund. Currently ~2.7% yield tax free. Because of the tax hit of selling the shares and current income I feel I must avoid taxable savings accounts/CDs and the potential returns of this fund seem attractive. I'd like to sit on this money for a year+.

--Next $2-3M additional after tax to invest through end of next year into a single tax managed conservative fund like VTMFX. I really want to target brain dead simplicity so I like this one fund approach but it lacks international. You could argue that even this tranche should go into the VCLAX if strictly following the windfall advice, but a $1M bond cushion in addition to my existing emergency funds and a largely paid off house seem conservative enough?

After a few years I could step back an evaluate my stock/bond ratio again based on updated job situation for myself/wife.

***
Concerns:

--Too much concentration in near term in CA bonds --seems like a relatively safe bet for a year or two but I'm new to bond investing.

--Overly conservative 50/50 split of VTMFX? Starting off very conservatively seems to fit general Windfall planning and also fits in with my desire to keep my risk low while I plot my future career moves. Perhaps after $2M into VTMFX I could start to put any additional funds into international.

--Not planning to use the 401k as my bond holding source as I may want near term access to some income from them depending on job gaps if I change.

Thanks for any thoughts here! Company stock volatility may affect my overall total here which is why I've tried to plot it in tranches.
Last edited by sf_tech_saver on Mon Sep 10, 2018 2:19 am, edited 3 times in total.

sambb
Posts: 2199
Joined: Sun Mar 10, 2013 3:31 pm

Re: Windfall at 40.5

Post by sambb » Sun Sep 09, 2018 6:22 pm

my goodness, congratulations. You will get all sorts of complex ideas here. They arent needed for success. Since you will be in a high tax bracket, i would place it in taxa managed balanced, take the dividends into money market, and tone down the thinking for 5-10 years without changing your investments. You will do very well. You wont have the peaks of aggressive investors, and you wont have the troughs of the same. You will be steady, and thats all you need with your assets.
And i would keep working in a job you like.

HEDGEFUNDIE
Posts: 1249
Joined: Sun Oct 22, 2017 2:06 pm

Re: Windfall at 40.5

Post by HEDGEFUNDIE » Sun Sep 09, 2018 7:07 pm

You should post on the “Lucrative careers” thread about how you came to be in this position.

Congratulations! Go take some time off and jet around the world in first class.

sf_tech_saver
Posts: 21
Joined: Sat Sep 08, 2018 9:03 pm

Re: Windfall at 40.5

Post by sf_tech_saver » Sun Sep 09, 2018 7:35 pm

sambb wrote:
Sun Sep 09, 2018 6:22 pm
my goodness, congratulations. You will get all sorts of complex ideas here. They arent needed for success. Since you will be in a high tax bracket, i would place it in taxa managed balanced, take the dividends into money market, and tone down the thinking for 5-10 years without changing your investments. You will do very well. You wont have the peaks of aggressive investors, and you wont have the troughs of the same. You will be steady, and thats all you need with your assets.
And i would keep working in a job you like.
Thanks for the feedback/congrats--its not all sold off yet and I can't wait till its in something more boring!

I've been studying nearly every single fund at Vanguard against a AA/Cost/Simplicity model and I kept liking VTMFX as a lazy/simple move to make here.

So you'd start investing it all directly into VTMFX and leave off the Muni tranche I was buffering for a year with? That could make sense as it has tons of bond exposure anyways but my 13% CA tax bracket made the CA muni seem like a good holding.

sf_tech_saver
Posts: 21
Joined: Sat Sep 08, 2018 9:03 pm

Re: Windfall at 40.5

Post by sf_tech_saver » Sun Sep 09, 2018 7:37 pm

HEDGEFUNDIE wrote:
Sun Sep 09, 2018 7:07 pm
You should post on the “Lucrative careers” thread about how you came to be in this position.

Congratulations! Go take some time off and jet around the world in first class.
Hah! Thanks!

Back story is that I've worked at a tech company for 7 years and am finally liquid on a very long/big/concentrated bet I made on making it work.

What I've learned from this forum is that its not at all crazy to consider risky employer equity as part of the mix, and thus dialing up bonds in the AA. That's been very helpful.

No plans to jet around the world....a bit of a workaholic....real dream is being more free to chose jobs without it having to be highest salary.

engin33r
Posts: 45
Joined: Thu Apr 07, 2011 3:45 pm
Location: North ATL

Re: Windfall at 40.5

Post by engin33r » Sun Sep 09, 2018 7:48 pm

I’m gonna guess Dropbox. Congrats!!

HEDGEFUNDIE
Posts: 1249
Joined: Sun Oct 22, 2017 2:06 pm

Re: Windfall at 40.5

Post by HEDGEFUNDIE » Sun Sep 09, 2018 7:49 pm

sf_tech_saver wrote:
Sun Sep 09, 2018 7:37 pm
No plans to jet around the world....a bit of a workaholic....real dream is being more free to chose jobs without it having to be highest salary.
You are well past that point, my friend.

shess
Posts: 49
Joined: Wed May 17, 2017 12:02 am

Re: Windfall at 40.5

Post by shess » Sun Sep 09, 2018 8:55 pm

I was in a similar position (lower payout, but $2M bought me a nice house in Palo Alto 12 years back, so it works out). Currently semi-retired (read "mostly retired, but open to returning to work at some point"). I found that my biggest regrets tend to be around not selling fast enough when given the chance to cash out high, rather than the paper "losses" from selling too early. Selling a lot all at once is a HUGE tax hit, but selling a lot every year isn't a small tax hit - at some point, you're just selling to much per year that you're in a high bracket regardless of what you do, in which case you might as well have just sold more.

IMHO a big thing to keep in mind is that the tax hit you will take from diversifying is a cost of doing business. You are only having that tax hit because you have done really well! So IMHO letting fear of those taxes prevent you from diversifying is thinking about things wrong. After more than a decade of intensely managing our portfolio, when we got our windfall I spent some time REALLY thinking about what it was all for, and at that point I decided to transition to a lazy/three-fund portfolio. It's not quite that simple, but that's the general goal. I have been really happy with it. IMHO it would have been easy to have my stress level scale up with portfolio size, but by going lazy, I feel like my stress level is way _down_. I believe it makes strong returns, but my main take-home is that I feel confident that I am doing the prudent thing for my wife and kids, that there isn't an outcome where we lose our financial independent because of foreseeable mistakes in investing.

One decision we made was to liquidate to buy our house. I was not making nearly the salary you are, and my wife was a homemaker, so we could only qualify for 25% of the mortgage on our home. So I just liquidated monthly until we found a place. Then after a few years I started paying down the mortgage aggressively, to keep our options open. Having a huge portfolio is nice, but owning your house free-and-clear is also nice.

IMHO you should include a donor-advised fund in your mix. If you sell $100k of stock with long-term gains and donate $100k of similar stock to the DAF, you mostly neutralize your tax exposure. Of course, now you're "forced" to give away that money, boo hoo. I have been very happy with our DAF (we use Vanguard, but the other big players are similar in terms of ease of use).

I'd consider a broad muni fund instead of the CA-specific fund, or at least split 50/50.

Since I'm not working, I've increased my fixed-income position a lot, but when I was working I had no issues with 90/10 or 80/20. My thinking on this changed a lot in the transition, before that I was very concerned that all my money be working as hard as it could, but at some point I realized I was "there" already, and it would make more sense to optimize for staying "there" than for increasing wealth. In your position, even after taxes, you'll end up with far more than you need to retire to a place with a more modest cost of living, so I think it's reasonable to optimize for maintaining that position. The only reason you'd really need more is if you want to retire in place, but I think it's good to really think about whether that is a desirable outcome. The Bay Area is super nice, lovely mountains and ocean and weather, but we've been here 20 years and we're starting to tire of being surrounded by people continuously striving just to get by.

sf_tech_saver
Posts: 21
Joined: Sat Sep 08, 2018 9:03 pm

Re: Windfall at 40.5

Post by sf_tech_saver » Sun Sep 09, 2018 9:16 pm

shess wrote:
Sun Sep 09, 2018 8:55 pm
I was in a similar position (lower payout, but $2M bought me a nice house in Palo Alto 12 years back, so it works out). Currently semi-retired (read "mostly retired, but open to returning to work at some point"). I found that my biggest regrets tend to be around not selling fast enough when given the chance to cash out high, rather than the paper "losses" from selling too early. Selling a lot all at once is a HUGE tax hit, but selling a lot every year isn't a small tax hit - at some point, you're just selling to much per year that you're in a high bracket regardless of what you do, in which case you might as well have just sold more.

IMHO a big thing to keep in mind is that the tax hit you will take from diversifying is a cost of doing business. You are only having that tax hit because you have done really well! So IMHO letting fear of those taxes prevent you from diversifying is thinking about things wrong. After more than a decade of intensely managing our portfolio, when we got our windfall I spent some time REALLY thinking about what it was all for, and at that point I decided to transition to a lazy/three-fund portfolio. It's not quite that simple, but that's the general goal. I have been really happy with it. IMHO it would have been easy to have my stress level scale up with portfolio size, but by going lazy, I feel like my stress level is way _down_. I believe it makes strong returns, but my main take-home is that I feel confident that I am doing the prudent thing for my wife and kids, that there isn't an outcome where we lose our financial independent because of foreseeable mistakes in investing.

One decision we made was to liquidate to buy our house. I was not making nearly the salary you are, and my wife was a homemaker, so we could only qualify for 25% of the mortgage on our home. So I just liquidated monthly until we found a place. Then after a few years I started paying down the mortgage aggressively, to keep our options open. Having a huge portfolio is nice, but owning your house free-and-clear is also nice.

IMHO you should include a donor-advised fund in your mix. If you sell $100k of stock with long-term gains and donate $100k of similar stock to the DAF, you mostly neutralize your tax exposure. Of course, now you're "forced" to give away that money, boo hoo. I have been very happy with our DAF (we use Vanguard, but the other big players are similar in terms of ease of use).

I'd consider a broad muni fund instead of the CA-specific fund, or at least split 50/50.

Since I'm not working, I've increased my fixed-income position a lot, but when I was working I had no issues with 90/10 or 80/20. My thinking on this changed a lot in the transition, before that I was very concerned that all my money be working as hard as it could, but at some point I realized I was "there" already, and it would make more sense to optimize for staying "there" than for increasing wealth. In your position, even after taxes, you'll end up with far more than you need to retire to a place with a more modest cost of living, so I think it's reasonable to optimize for maintaining that position. The only reason you'd really need more is if you want to retire in place, but I think it's good to really think about whether that is a desirable outcome. The Bay Area is super nice, lovely mountains and ocean and weather, but we've been here 20 years and we're starting to tire of being surrounded by people continuously striving just to get by.
Really appreciate your story and the first hand understanding that while this could be a great outcome -- retiring with my existing lifestyle in the bay area would likely take a good bit more. Congrats on the semi-retirement!

I bet that Palo Alto house did as well as any part of your portfolio! I lived in Palo Alto in 2009 before the Face Book IPO and it was expensive then...but since its just almost untouchable. One of the reasons I certainly don't feel 'set' after this and want to continue to work is that the wife would love for our child to grow up in Palo Alto. A SF condo is much more attainable for us right now and sending one child to private school (529 max out probably should have been included) is manageable. We will stay and work here and maybe in another 10 years find another good outcome or move to a lower cost area.

Your comment on trying to maintain 'made it' is spot on. Maintaining an income worthy nest egg is high on my priority list, and thus the 50/50 AA start. I hope to generate upside from my ongoing drive to work but enjoy a backstop of investments.

The tax hit is essentially 50% and it just is what it is. I'm giving no thought to going long on my company shares because I'd never invest in that style in my own portfolio. Working at a company I feel its too easy to be too bullish or bearish. My perspective is that if the company wants me to have the motivation of a big/concentrated position they need to continue to make the stock grants size-able. Its not my job to maintain that. Once I vest and can sell I consider it income and should be immediately diversified.....

Thanks for the 50/50 advice on CA muni. Do you use any in your income section or are the broader buckets easier?

HEDGEFUNDIE
Posts: 1249
Joined: Sun Oct 22, 2017 2:06 pm

Re: Windfall at 40.5

Post by HEDGEFUNDIE » Sun Sep 09, 2018 10:35 pm

OP, a median house in Palo Alto costs $3.3M.

Your $8M windfall can cover that and still have a few $M left over after taxes. And you two would still be making $700k per year (and have no mortgage to pay!!).

You have “made it” by any definition of that phrase.

shess
Posts: 49
Joined: Wed May 17, 2017 12:02 am

Re: Windfall at 40.5

Post by shess » Sun Sep 09, 2018 10:46 pm

sf_tech_saver wrote:
Sun Sep 09, 2018 9:16 pm
The tax hit is essentially 50% and it just is what it is.
Ooooph. Sorry, I maybe made an assumption about whether your grant was ISO (and thus likely early-exercised and long-term now) or NQ (and thus still in option form and straight-up income). If NQ or similar, my point about DAF probably doesn't apply. I mean, you're lucky, use a DAF to help spread your good luck, but the wins aren't as sizable as they are with shares with high long-term appreciation. Might be a reasonable way to get out of your previous-company shares, though.
sf_tech_saver wrote:
Sun Sep 09, 2018 9:16 pm
I'm giving no thought to going long on my company shares because I'd never invest in that style in my own portfolio. Working at a company I feel its too easy to be too bullish or bearish. My perspective is that if the company wants me to have the motivation of a big/concentrated position they need to continue to make the stock grants size-able. Its not my job to maintain that. Once I vest and can sell I consider it income and should be immediately diversified.....
Good thinking. My position has always been that if you didn't like the company you'd quit, so usually there's an intrinsic bias towards wanting to hold shares in your employer, even if you'd be objectively better off not doing so.
sf_tech_saver wrote:
Sun Sep 09, 2018 9:16 pm
Thanks for the 50/50 advice on CA muni. Do you use any in your income section or are the broader buckets easier?
I'm kind of scattershot based on what's good at the point where I start. I've got a big chunk in iBonds from the 00's, when you could put $60k/year in and the fixed rate was reasonable, so those are centered around 3.5% (current ones are not so sweet). Plus some VACDX (Intermediate-term CA munis), then in tax-deferred some Vanguard inflation-protected and total-market funds. I have a few relatively high-rate CD and savings to manage cashflow, and since I don't have employment income I keep a healthy buffer on those (so I'm not sure where they transition from straight cashflow to fixed-income position). The main change I'm considering is to shift some cashflow holdings towards Treasury accounts and national muni accounts. For many years those didn't compete well rate-wise with someplace like Ally Bank, but now they are (flip side, not being employed means the tax advantage isn't as great).

My 50/50 is just a gut feel based on reading around on this site. I know there are some people who are concerned about single-state funds, because of things like pension liabilities. I also am about 80% convinced on the theory of sticking with US Treasury debt only and keeping private exposure in equities, which is why I don't really have that much muni. But it will take you awhile to stage reasonable amounts into retirement accounts :-).

Also, with these amounts, the amount a three-fund lazy portfolio throws off in dividends is pretty nice. Not salary nice, nor mortgage nice, but maybe couple-kids-in-private-schools nice. Given my long-term preferences, I was kind of surprised at how satisfying I find the dividend payments.

---

Check if you have an after-tax 401k provision. What this is is after the regular $18.5k/year plus matching, some companies allow you to make after-tax contributions to the $55k total cap. Usually this is setup to allow you to roll those funds into Roth 401k or Roth IRA. The basic idea is that you're paying taxes on that money regardless of where you invest it, but by getting it under the Roth umbrella you can get rid of taxes on it going forward.

gips
Posts: 475
Joined: Mon May 13, 2013 5:42 pm

Re: Windfall at 40.5

Post by gips » Sun Sep 09, 2018 11:50 pm

Congrats! I started a company with some partners and we found ourselves in a similar position with similar numbers. Like you, I used bonds to offset my company stock position. Here are some thoughts:

- get thee to a tax advisor. We used a big name firm for our company’s books and cut a deal to use them for our personal taxes. They offered some great advice.

- liquidation: two of my partners decided to delegate liquidation to the trading desk of their brokerage firm. It seems to me you should be able to get vwap over a period of time. The rest of us liquidated on our own. It was tedious and I’m not a trader. In retrospect, delegation would have been a better idea (at a fair price for a fair fee)

- investing: I put enough in CDs so that if the stock market went to zero, I’d still never have to work again. IMO, this is true financial security and changes your approach to work and life. The rest is invested in a three fund equity approach.

One of my partners just gave it all to vanguard pas. He has an mba from a top school, could manage the $ but wants to spend his time doing other things. I think that’s a solid approach.

At some point you’re probably going to agonize over dca. I lump summed into the market.

Luck!

sf_tech_saver
Posts: 21
Joined: Sat Sep 08, 2018 9:03 pm

Re: Windfall at 40.5

Post by sf_tech_saver » Mon Sep 10, 2018 2:21 am

HEDGEFUNDIE wrote:
Sun Sep 09, 2018 10:35 pm
OP, a median house in Palo Alto costs $3.3M.

Your $8M windfall can cover that and still have a few $M left over after taxes. And you two would still be making $700k per year (and have no mortgage to pay!!).

You have “made it” by any definition of that phrase.
Thanks hedgie...you are right-- I'm just trying to manage my own psychology here until its all diversified. I also still feel like I can't cover our current income with investment income--which is again a high bar. Really appreciate everyones help in thinking this through.

sf_tech_saver
Posts: 21
Joined: Sat Sep 08, 2018 9:03 pm

Re: Windfall at 40.5

Post by sf_tech_saver » Mon Sep 10, 2018 2:43 am

gips wrote:
Sun Sep 09, 2018 11:50 pm
Congrats! I started a company with some partners and we found ourselves in a similar position with similar numbers. Like you, I used bonds to offset my company stock position. Here are some thoughts:

- get thee to a tax advisor. We used a big name firm for our company’s books and cut a deal to use them for our personal taxes. They offered some great advice.

- liquidation: two of my partners decided to delegate liquidation to the trading desk of their brokerage firm. It seems to me you should be able to get vwap over a period of time. The rest of us liquidated on our own. It was tedious and I’m not a trader. In retrospect, delegation would have been a better idea (at a fair price for a fair fee)

- investing: I put enough in CDs so that if the stock market went to zero, I’d still never have to work again. IMO, this is true financial security and changes your approach to work and life. The rest is invested in a three fund equity approach.

One of my partners just gave it all to vanguard pas. He has an mba from a top school, could manage the $ but wants to spend his time doing other things. I think that’s a solid approach.

At some point you’re probably going to agonize over dca. I lump summed into the market.

Luck!
Congrats on the big win--thanks for sharing the notes! Sounds like you were very central and close to it which makes the outcome even more fun.

--Liquidation advice -- yes I definitely think I need trading help here. I plan to see how much Schwab would charge to help me trade out of all of this. I found myself researching lot sizes and then called a stop....not my game.

--CDs-- wow ok even more conservative than my plan. I was dancing with the CA munis because of my current salary heavy mix (which could change). Feedback so far seems to be that treasury/stock is the more tested risk/reward.

--DCA --absolutely, I'm worried I'm using the windfall period as a stealth DCA because of the sense of a 'market high' right now. At the same time I don't think stepping back for a moment and using bond heavy initial investments is bad portfolio theory given I'm still working in an equity leveraged tech segment (how I got here...). Half of writing about it all is just building conviction to hit that 'buy' button and go when the time comes....

msk
Posts: 949
Joined: Mon Aug 15, 2016 10:40 am

Re: Windfall at 40.5

Post by msk » Mon Sep 10, 2018 3:06 am

I am much older, 74, and a large fraction of my NW (low 8 figures) came after retirement at age 55. I have a few comments that may aid in thinking things out. A "huge" windfall is only huge to those who do not have it, e.g. pre-windfall. In the post-period your yardsticks grow larger, inevitably, e.g. you want to contribute to charity, help relatives, adult offspring, etc. As you get older, your own nuclear family's consumption may actually go down in real terms but your overall wants (for charity?) go up rather than down. You may yet find that even $20 million does not fund much in the way of charity or purchase nice homes for your kids in your expensive neighborhood. The OP has plenty of investment time ahead. No point in wasting it. Were he my son, my advice would be very simple: pay off your home (it's actually not a bad investment and with reasonable luck it'll keep up with inflation) and place all the rest into stocks (either US-total or worldwide, e.g. VT). With a multi-million $ home as anchor I see no reason to own low-yielding bonds in addition. If something awfully bad happens one could presumably sell the home and downsize? OK, one can imagine some ridiculous scenarios but hopefully our real life future, with all that invested, will be quite bearable. The OP seems to have his nuclear family's "needs" met but he might as well invest for future "wants". NB this is not the view of one who wishes to duck all risks because he has won the game...

sf_tech_saver
Posts: 21
Joined: Sat Sep 08, 2018 9:03 pm

Re: Windfall at 40.5

Post by sf_tech_saver » Tue Sep 11, 2018 12:55 am

msk wrote:
Mon Sep 10, 2018 3:06 am
I am much older, 74, and a large fraction of my NW (low 8 figures) came after retirement at age 55. I have a few comments that may aid in thinking things out. A "huge" windfall is only huge to those who do not have it, e.g. pre-windfall. In the post-period your yardsticks grow larger, inevitably, e.g. you want to contribute to charity, help relatives, adult offspring, etc. As you get older, your own nuclear family's consumption may actually go down in real terms but your overall wants (for charity?) go up rather than down. You may yet find that even $20 million does not fund much in the way of charity or purchase nice homes for your kids in your expensive neighborhood. The OP has plenty of investment time ahead. No point in wasting it. Were he my son, my advice would be very simple: pay off your home (it's actually not a bad investment and with reasonable luck it'll keep up with inflation) and place all the rest into stocks (either US-total or worldwide, e.g. VT). With a multi-million $ home as anchor I see no reason to own low-yielding bonds in addition. If something awfully bad happens one could presumably sell the home and downsize? OK, one can imagine some ridiculous scenarios but hopefully our real life future, with all that invested, will be quite bearable. The OP seems to have his nuclear family's "needs" met but he might as well invest for future "wants". NB this is not the view of one who wishes to duck all risks because he has won the game...
MSK -- there is a higher calling in your response here --namely to look to win bigger than just to protect oneself from working and look after family/community. Thanks for sharing your (important) perspective.

My dream is to achieve a portfolio sufficient to retire off the dividends alone someday so I could leave the rest to my son/others. Going to need to find some additional wins in my remaining career to pull this off.

Appreciate the argument that buying a house outright is a sufficient bonds AA. I originally wanted to pay all cash for the house, but getting money at 2.4% for the mortgage after tax benefits feels like I can do better by even putting those funds even into VMTX over the next 10 years. Maybe I'm being too precise here though and for simplicity just paying it all off isn't a bad call.

The variable here is my next job/perspective and I hope to use a conservative period to firm up on that front and potentially get more aggressive. If I have 20 years to invest over the math is pretty strait forward......

Post Reply