[USER]

My 70-year-old mom is getting ready to sell her property for around $2 million. She plans to buy another house for around $600k, and then invest around $1 million.

She needs a safe investment vehicle to keep this money. The goal is that she can live off the interest and not touch the principle, except for emergency situations.

Any advice for where she should keep this money?

[Dalton]

If it was me, 24-36 months of expenses in cash and the rest in the stock market.

[Joe]

Buy a 5 year immediate annuity. Paying 4.65% apr this week. All principal returned at end of term.

She could withdraw up to 10% per year, all taxable.

[Ralph]

1M in a 5% HYSA is 50K a year in interest alone or almost 4200 a month and is totally safe.. Not sure if she is getting anything any other money.

[Karen]

Can she lease it out and live off the rent?

Then when she passes you get a step up in basis, and depending on how much she bought the house for may save a lot of money in taxes too.

Just another option.

Suggested: What investment would you recommend for someone who is in early 20s, and looking for high risk/high reward?

[Allen]

Does she have a financial plan / retirement income plan?

Be advised that “safe” investments are unlikely to keep up with inflation. It’s trading one type of risk (short-term volatility) for another (long-term erosion of purchasing power).

[Denise]

I suggest a HYSA, bonds, or whatever else is fiscally conservative!

[Winnie]

She can invest in CDs in different mature lengths.

[Molly]

1. Talk to local Real estate attorney with Tax expertise to determine how much tax she’ll have to pay on the sale and investigate options to defer that tax someplace where she can make $$ withdrawals.

2. Think about keeping it for AirBnb use…if it’s in a nice area, that might provide a great return… even if it’s just for 1-2 years, so she can still get the $250/500k capital gains exemption

You can check also: Suggest some ETFs and index funds for long term investment!

[Juliana]

My advice is to take your money and go risky. If you’re lucky. I’m sure you can make a billion dollars.

[Tristan]

Generally my go to is NOT an annuity, and it may not make sense especially given her age, she’s a bit on the upper limit of when it may make sense, but the rates are crazy high right now, and if getting one that also pays a return of premium death benefit, it might be something to consider for potentially a portion as it pays a predictable amount monthly for the rest of her life.

Another option is mini bonds, (which can seem like lower interest rate but you have to look at the tax equivalent yield), if she lives in a state that has no state taxes she can get tax free interest, which can also help with overall tax burden (such as not subjecting her SS to tax)

[Hamza]

Run down the basics.

How long does she want her money to last? Does she want to pass it on or use it all?

How much does she need? How’s her health? How’s her ability to handle her finances? Can she manage it or do you or someone else need to manage it?

Is this the only thing she has for retirement?
What will be the tax situation with the capital gains? How much will she keep and have to pay taxes on?

What’s your definition of safe?
If you mean no risks at ALL…there are only so many accounts and investments she can put the money into where it will grow (not at a great rate if she needs access to it short term but an okay rate if she needs access to it long term).

If she has the ability for some risk, then a portion into more riskier but well educated investments and the rest in the safer slow growth but guaranteed returns.

You’ll have to answer these questions then take into account what others have said and then go with it.

Also, check out: How can I make 30k fast (within 2 years) with investments?

[Lex]

Question: What will be her income requirements?
A HYMM sounds good – except you likely lose buying power to inflation.

Based upon not knowing income needs she might consider investing in Southern Company. As a utility it is fairly immune to large price changes. It also yields about 4% annually. Its return over many years is above the S&p 500.

[Mindi]

Treasury notes and bonds of various lengths.

I’d avoid HYSA because most likely interest rates will drop as soon as the fed starts cutting the rate which will probably be next year.

[Cassie]

Interview many brokers and then list on the MLS and negotiate commission. Unless you are really versed in contracts I wouldn’t do fsbo.

Honestly sellers usually need a neutral party to stage their house and price it. As an investor I always get a better deal buying fsbo but would never sell without putting it on the MLS. Do you know how to vet buyers?

I talk to their lender, get proof of down-payment funds, ask if they’ve just had a credit check or if they’ve actually verified all the tax documents etc.

Then there are timelines to abide by in the contract, and usually negotiations after inspection.

You can easily mess this up if you don’t know what you’re doing.

Chances are the buyer will have an agent who will push you around too.

[Robert]

I would look at some sort of target-date retirement fund. Your mom is 70; and her life expectancy is 88; with a good chance she will live into her 90’s.

While it is desireable to stick it into something entirely safe (Treasuries, for example) she still needs the inflation protection that only stocks (a fund mimicking the S&P 500) can provide.

Worth a look: Seeking advice on rural/farm land investment. New to this. Any tips?

[Charlotte]

You can simply engage in digital assets!

I’ve been doing it for years now, and the payment is obviously better than what you get from other jobs. It can be done on your own schedule as well, and it’s quite lucrative. Might just be what you need.

[Stefan]

Good time for highly rated long duration bonds, yields will probs be as good as it gets for a while.

[Diane]

Vanguard VTSAX for at least 50% and VBTLX for the bond portion. Whatever her comfort level. Over the long haul, she will need some stocks for growth.

Also, 1-2 years of emergency fund in a HYSA.

[Taylor]

Would get with a wealth strategist to help reduce the tax burden and then buy rental properties.

[Suzanne]

$50,000 interest paid at a 5% return. I would look for a HYSA for the first year while she continues to settle and adjust. Look for one where the interest is paid out monthly.

I would also make sure it’s structured to fall outside of probate if she passes away assuming it’s a straightforward inheritance.

Additionally, consider: Best investment for immediate returns at age 65?

[James]

High yield savings account, 3 months, emergency found, the rest in EFT, with dividends, and the S&P 500, use the rule of 4 % to live.

[Author]

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