Dilemma: what to do with a large amount of cash at the age of 75?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
Always passive
Posts: 912
Joined: Fri Apr 14, 2017 4:25 am
Location: Israel

Dilemma: what to do with a large amount of cash at the age of 75?

Post by Always passive »

I know, the advise is to invest immediately, but the situation here is a bit different. My dear friend (I know him for 40 years) sold his company that he built from scratch and got about $50 million cash. Now sitting in the bank. he is 75 years old now.
He is very comfortable with passive investing and wishes to invest this money that way.
The big question is that he feels that the market has gone wild and is very fearful that it will correct sooner than later. And who wouldn’t!
So what should his strategy be?
He wants to build 2 buckets, one to live from, the very boring bucket on about $5 million: 80% inflation protected fixed income, maybe a ladder, and 20% in equities.
The other bucket, $45 million, is most likely inheritance (inside a trust) Out of this money, he wants to invest about $10 millions in real estate (not REITs) and the rest in indexes.
Does anyone know of a similar situation and can give advice? I know what the theory says, but real examples are always much more useful.
So the questions are: what should his second bucket allocation be? And how to deploy the cash? This is his dilemma!
I would add another question: what should he do to answer his tough questions? Is there a process?
By the way, he does not trust professional advisers/bankers, and for good reasons.
Much thanks for the help.
helloeveryone
Posts: 831
Joined: Sun Sep 04, 2016 5:16 pm

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by helloeveryone »

Just a thought - keep it simple. put it all in Wellington fund. 70:30 stock:bond. Live off dividends. Reinvest the rest. Or pick 2-3 fund portfolio and AA if want to be little more hands on.

He’s 75. Regardless of what he does he will not run out of money. It a simple approach. Why stress about where along the market graph he is investing in at this point in time. Whether he has 5 good years, 15 good years, 30 good years of life etc… money is no longer a concern. Any “tweaking” ultimately will just impact what he leaves behind for family or charity.
Last edited by helloeveryone on Tue May 11, 2021 12:17 am, edited 1 time in total.
roth evangelist
Posts: 100
Joined: Wed Jul 01, 2020 9:56 pm

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by roth evangelist »

I'll let others more equipped to answer the more detailed questions take those, but my simple recommendation if he's afraid to invest all at once would be to split the difference. Invest half now and choose a period of time (say, 5-10 years) to dollar cost average.
ivgrivchuck
Posts: 756
Joined: Sun Sep 27, 2020 6:20 pm

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by ivgrivchuck »

Always passive wrote: Mon May 10, 2021 11:34 pm Does anyone know of a similar situation and can give advice? I know what the theory says, but real examples are always much more useful.
So the questions are: what should his second bucket allocation be? And how to deploy the cash? This is his dilemma!
I'm not in a similar situation (very few people are!).

The main question is: What does he want to achieve?

- Maximum expected return with a high risk? 80/20 (stocks/bonds)
- Mainly capital preservation (against inflation)? 40/60 (stocks/bonds)

A simple one-stop shop:
https://investor.vanguard.com/mutual-fu ... trategy/#/

Of course there are many good alternatives (and a lot of very bad alternatives)
37% VTI | 37% VXUS | 13% I-bonds | 13% EE-bonds
ivgrivchuck
Posts: 756
Joined: Sun Sep 27, 2020 6:20 pm

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by ivgrivchuck »

Always passive wrote: Mon May 10, 2021 11:34 pm Does anyone know of a similar situation and can give advice? I know what the theory says, but real examples are always much more useful.
Actually the theory doesn't say anything. A theoretical model always requires a utility function (objective). And since we don't know what that is, there is no theoretical answer.

For a retiree some of the objectives might be:
- Spending as much money as possible while minimizing the risk of ruin
- Maximizing the expected legacy to heirs/charities
- Portfolio stability

That being said, if he doesn't have a clue what he wants, he could with the traditional 60:40 stocks/bonds portfolio. It's almost never a terrible choice...
37% VTI | 37% VXUS | 13% I-bonds | 13% EE-bonds
Luckywon
Posts: 1404
Joined: Tue Mar 28, 2017 10:33 am

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by Luckywon »

Estate planning with a competent trust and estates lawyer will probably prove at least as consequential to heirs as how he invests his money at this point.
User avatar
mrspock
Posts: 1650
Joined: Tue Feb 13, 2018 2:49 am
Location: Vulcan

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by mrspock »

helloeveryone wrote: Tue May 11, 2021 12:14 am Just a thought - keep it simple. put it all in Wellington fund. 70:30 stock:bond. Live off dividends. Reinvest the rest. Or pick 2-3 fund portfolio and AA if want to be little more hands on.

He’s 75. Regardless of what he does he will not run out of money. It a simple approach. Why stress about where along the market graph he is investing in at this point in time. Whether he has 5 good years, 15 good years, 30 good years of life etc… money is no longer a concern. Any “tweaking” ultimately will just impact what he leaves behind for family or charity.
This. At 75, he's earned the right to make it somebody else's problem.
Topic Author
Always passive
Posts: 912
Joined: Fri Apr 14, 2017 4:25 am
Location: Israel

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by Always passive »

mrspock wrote: Tue May 11, 2021 2:27 am
helloeveryone wrote: Tue May 11, 2021 12:14 am Just a thought - keep it simple. put it all in Wellington fund. 70:30 stock:bond. Live off dividends. Reinvest the rest. Or pick 2-3 fund portfolio and AA if want to be little more hands on.

He’s 75. Regardless of what he does he will not run out of money. It a simple approach. Why stress about where along the market graph he is investing in at this point in time. Whether he has 5 good years, 15 good years, 30 good years of life etc… money is no longer a concern. Any “tweaking” ultimately will just impact what he leaves behind for family or charity.
This. At 75, he's earned the right to make it somebody else's problem.
Hard for him to let go
Topic Author
Always passive
Posts: 912
Joined: Fri Apr 14, 2017 4:25 am
Location: Israel

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by Always passive »

ivgrivchuck wrote: Tue May 11, 2021 1:13 am
Always passive wrote: Mon May 10, 2021 11:34 pm Does anyone know of a similar situation and can give advice? I know what the theory says, but real examples are always much more useful.
Actually the theory doesn't say anything. A theoretical model always requires a utility function (objective). And since we don't know what that is, there is no theoretical answer.

For a retiree some of the objectives might be:
- Spending as much money as possible while minimizing the risk of ruin
- Maximizing the expected legacy to heirs/charities
- Portfolio stability

That being said, if he doesn't have a clue what he wants, he could with the traditional 60:40 stocks/bonds portfolio. It's almost never a terrible choice...
He wants a capital preservation portfolio; however, highly conflicted by the current bond market situation
User avatar
MN-Investor
Posts: 486
Joined: Mon May 02, 2011 9:04 am
Location: Twin Cities

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by MN-Investor »

That's a heck of a lot of money to be investing in a taxable account. I don't know what the answer is, but he might want to keep that in mind when he's looking at investing. Municipal bonds, maybe. Or a stock fund generating qualified dividends. Maybe someone here has more experience with that issue and can chime in.
The key to success - Save early, save often, invest well.
dogagility
Posts: 1665
Joined: Fri Feb 24, 2017 6:41 am

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by dogagility »

I suggest he have a chat with a fee-only financial advisor. Someone like Rick Ferri comes to mind.

He has two portfolios. His and his heirs. Each should have their own asset allocation and investment strategy. His might be more conservative compared to his heirs.
The more flexibility you have the less you need to know what happens next. -- Morgan Housel
Topic Author
Always passive
Posts: 912
Joined: Fri Apr 14, 2017 4:25 am
Location: Israel

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by Always passive »

dogagility wrote: Tue May 11, 2021 4:37 am I suggest he have a chat with a fee-only financial advisor. Someone like Rick Ferri comes to mind.

He has two portfolios. His and his heirs. Each should have their own asset allocation and investment strategy. His might be more conservative compared to his heirs.
Good point. I plan to discuss the issue with Larry Swedroe. I have talked to him a few times in the past about my situation, i.e., expat with limited access to US investments, no funds, just ETFs. My friend is in the same situation. Larry has been very helpful.
User avatar
JoeRetire
Posts: 8335
Joined: Tue Jan 16, 2018 2:44 pm

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by JoeRetire »

Always passive wrote: Mon May 10, 2021 11:34 pm He wants to build 2 buckets, one to live from, the very boring bucket on about $5 million: 80% inflation protected fixed income, maybe a ladder, and 20% in equities.
The other bucket, $45 million, is most likely inheritance (inside a trust) Out of this money, he wants to invest about $10 millions in real estate (not REITs) and the rest in indexes.

So the questions are: what should his second bucket allocation be? And how to deploy the cash? This is his dilemma!
By the way, he does not trust professional advisers/bankers, and for good reasons.
If it were me, I'd be working with a competent estate attorney and fiduciary professional adviser. But if he can't bring himself to trust any, he should ask his heirs how they want their money invested.

Is he actually asking you for your help?
Just remember: it's not a lie if you believe it.
minimalistmarc
Posts: 1261
Joined: Fri Jul 24, 2015 4:38 pm

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by minimalistmarc »

If it were me:
1) inheritance tax planning/hire a good accountant
2) everything into VWRL Vanguard all world
UpperNwGuy
Posts: 5443
Joined: Sun Oct 08, 2017 7:16 pm

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by UpperNwGuy »

Always passive wrote: Tue May 11, 2021 2:52 am
mrspock wrote: Tue May 11, 2021 2:27 am
helloeveryone wrote: Tue May 11, 2021 12:14 am Just a thought - keep it simple. put it all in Wellington fund. 70:30 stock:bond. Live off dividends. Reinvest the rest. Or pick 2-3 fund portfolio and AA if want to be little more hands on.

He’s 75. Regardless of what he does he will not run out of money. It a simple approach. Why stress about where along the market graph he is investing in at this point in time. Whether he has 5 good years, 15 good years, 30 good years of life etc… money is no longer a concern. Any “tweaking” ultimately will just impact what he leaves behind for family or charity.
This. At 75, he's earned the right to make it somebody else's problem.
Hard for him to let go
He must let go. Speaking as a person who is only a few years younger than your friend, I would not enter into any financial arrangements that would require me to spend time and energy managing them as the risk of medical or cognitive decline increases. Real estate investments especially.
Beehave
Posts: 948
Joined: Mon Jun 19, 2017 12:46 pm

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by Beehave »

Purchase an immediate annuity that pays equivalent to last year's salary.

Take a couple of million more and buy a couple of deferred annuities - say, two years and 5 years out. That should cover future inflation.

Put the rest into investments based on recommendations of high caliber fiduciary advisors (including tax and estate law expertise).

If the annuities don't cover inflation or expenses (maybe expensive heath care)- - take more from the heirs pile (i.e., don't invest it all in real estate - leave some more liquid).

The annuity takes money from the capital gained through expenditure of the 75-year-old's human capital over the years and extends it as salary for the remainder of his life. Why stop managing one business and start managing a portfolio this person appears to be plainly worried about? Create a pension and relax given the opportunity.
Topic Author
Always passive
Posts: 912
Joined: Fri Apr 14, 2017 4:25 am
Location: Israel

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by Always passive »

JoeRetire wrote: Tue May 11, 2021 4:47 am
Always passive wrote: Mon May 10, 2021 11:34 pm He wants to build 2 buckets, one to live from, the very boring bucket on about $5 million: 80% inflation protected fixed income, maybe a ladder, and 20% in equities.
The other bucket, $45 million, is most likely inheritance (inside a trust) Out of this money, he wants to invest about $10 millions in real estate (not REITs) and the rest in indexes.

So the questions are: what should his second bucket allocation be? And how to deploy the cash? This is his dilemma!
By the way, he does not trust professional advisers/bankers, and for good reasons.
If it were me, I'd be working with a competent estate attorney and fiduciary professional adviser. But if he can't bring himself to trust any, he should ask his heirs how they want their money invested.

Is he actually asking you for your help?
I know him for 40 years. I am only a bit younger then him and for years we have discussed investments. Luckily I am beyond having to think about what to do. I think that I have won the game, been retired for 16 years (since age 55). I am active in this group, but seldom take any actions.
I introduced him to passive investing. I am among many he is talking to, but because of our long friendship he trusts my advice the most. When he sold his company, his name was in the local papers, and he got many cold calls of family offices/professional advisers that wanted to manage his money. He is smart enough to be very suspicious about all these people.
Grt2bOutdoors
Posts: 23801
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by Grt2bOutdoors »

Always passive wrote: Tue May 11, 2021 2:54 am
ivgrivchuck wrote: Tue May 11, 2021 1:13 am
Always passive wrote: Mon May 10, 2021 11:34 pm Does anyone know of a similar situation and can give advice? I know what the theory says, but real examples are always much more useful.
Actually the theory doesn't say anything. A theoretical model always requires a utility function (objective). And since we don't know what that is, there is no theoretical answer.

For a retiree some of the objectives might be:
- Spending as much money as possible while minimizing the risk of ruin
- Maximizing the expected legacy to heirs/charities
- Portfolio stability

That being said, if he doesn't have a clue what he wants, he could with the traditional 60:40 stocks/bonds portfolio. It's almost never a terrible choice...
He wants a capital preservation portfolio; however, highly conflicted by the current bond market situation
Buy original issue US Treasury bills, roll them over at maturity- super liquid, no loss of principal, not much in the way of returns either.

He does not have to let go, so long as his mental capacity and zest for living remains intact. I have relatives who are high net worth, they know how to make money grow and their retirement job is to manage that pot. They love it though their strategy is not looked upon favorably here, they are strict value and opportunistic investors. It’s worked out well over the decades. If your friend has the investment knack then he will know what to do but there’s no reason to toss caution to the wind either. Original issue US Treasury bills have no management fee attached, no risk to nominal principal and the right investment can make up for years of low yield if you have the luxury of time and patience. The average investor does not have that luxury. The heirs will be happy to get anything from $70 million and up regardless of just how it’s invested. Remember that!
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Nowizard
Posts: 3386
Joined: Tue Oct 23, 2007 5:33 pm

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by Nowizard »

I would recommend he consider the many excellent suggestions obtained from this thread but not totally depend upon them. Most with large amounts to invest would also use a professional to aid initial decision making, particularly if personal investing experience is limited. There are definitely pragmatic suggestions to be made about how to find one.

Tim
dbr
Posts: 35966
Joined: Sun Mar 04, 2007 9:50 am

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by dbr »

I think the Swedroe, Ferri, etc. ilk of advisors would be recommended. I am not making a recommendation for anyone in particular.

This forum will be able to come up with a list of plausible suggestions that run the gamut of about all you can imagine with little guidance what to select. These will not be wrong but are not likely to be right either, except by chance. An important part of the learning curve will be learning how to understand and work with the inherent volatility of investment returns. At some point a person who invests, certainly in stocks, has to come to grips with the fact that falling markets come with the territory. For one to think he knows when is foolish. I wonder if a person age 75 really wants to own investment real estate. But if he is hiring someone to run it for him or he is a passive partner in something maybe he can.

The thing for him to do is think broadly what he really wants. I would say that there is no particular point to dividing the assets into buckets. What is needed for sure is a good estate attorney and a good tax accountant.

The thing for him not to do is jump into the arms of a predatory "advisor."

I am actually curious how you hold $50M at a bank.
Topic Author
Always passive
Posts: 912
Joined: Fri Apr 14, 2017 4:25 am
Location: Israel

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by Always passive »

dbr wrote: Tue May 11, 2021 8:55 am I think the Swedroe, Ferri, etc. ilk of advisors would be recommended. I am not making a recommendation for anyone in particular.

This forum will be able to come up with a list of plausible suggestions that run the gamut of about all you can imagine with little guidance what to select. These will not be wrong but are not likely to be right either, except by chance. An important part of the learning curve will be learning how to understand and work with the inherent volatility of investment returns. At some point a person who invests, certainly in stocks, has to come to grips with the fact that falling markets come with the territory. For one to think he knows when is foolish. I wonder if a person age 75 really wants to own investment real estate. But if he is hiring someone to run it for him or he is a passive partner in something maybe he can.

The thing for him to do is think broadly what he really wants. I would say that there is no particular point to dividing the assets into buckets. What is needed for sure is a good estate attorney and a good tax accountant.

The thing for him not to do is jump into the arms of a predatory "advisor."

I am actually curious how you hold $50M at a bank.
Good points. On the bank, there is no issue. Once the bank knows the source (they check very carefully to make sure that the $ are clean), they will take as much as you can give them.
gogreen
Posts: 78
Joined: Fri Feb 26, 2021 4:38 pm

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by gogreen »

Always passive wrote: Mon May 10, 2021 11:34 pm I know, the advise is to invest immediately, but the situation here is a bit different. My dear friend (I know him for 40 years) sold his company that he built from scratch and got about $50 million cash. Now sitting in the bank. he is 75 years old now.
He is very comfortable with passive investing and wishes to invest this money that way.
The big question is that he feels that the market has gone wild and is very fearful that it will correct sooner than later. And who wouldn’t!
So what should his strategy be?
He wants to build 2 buckets, one to live from, the very boring bucket on about $5 million: 80% inflation protected fixed income, maybe a ladder, and 20% in equities.
The other bucket, $45 million, is most likely inheritance (inside a trust) Out of this money, he wants to invest about $10 millions in real estate (not REITs) and the rest in indexes.
Does anyone know of a similar situation and can give advice? I know what the theory says, but real examples are always much more useful.
So the questions are: what should his second bucket allocation be? And how to deploy the cash? This is his dilemma!
I would add another question: what should he do to answer his tough questions? Is there a process?
By the way, he does not trust professional advisers/bankers, and for good reasons.
Much thanks for the help.
75 years old? $50 million? Well I'd say it's a good idea to try to burn at least $5mln per year
mr_brightside
Posts: 401
Joined: Sat Oct 17, 2020 3:23 pm

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by mr_brightside »

i would be giving a lot of that away to worthwhile charities

-----------------------------------
dbr
Posts: 35966
Joined: Sun Mar 04, 2007 9:50 am

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by dbr »

mr_brightside wrote: Tue May 11, 2021 10:55 am i would be giving a lot of that away to worthwhile charities

-----------------------------------
Yes, a person could consult with his estates attorney considering charitable trust giving or even endowing a trust for some reason.

This is an issue of purpose and also an issue of inheritance and taxes.
User avatar
retired@50
Posts: 5915
Joined: Tue Oct 01, 2019 2:36 pm
Location: Living in the U.S.A.

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by retired@50 »

Consider reading the book by Paul Remack called "Playing The Game".

Link: https://www.goodreads.com/book/show/369 ... l2t&rank=1

Regards,
This is one person's opinion. Nothing more.
User avatar
Wiggums
Posts: 3881
Joined: Thu Jan 31, 2019 8:02 am

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by Wiggums »

$50 million is a significant amount of money. Your friend needs a financial plan. Running out a money is almost impossible. I would want some money in my control with the majority of the money invested and managed by someone else. My Aunt was just scammed. I never fo business with unsolicited callers. That is my rile. My Grandfather started mismanaging money before he died causing a suspension of medicare coverage for his wife.

Having a well thought-out plan is the first step. You friend has more money than he can spend in lifetime.

Congratulations and good luck.
bogcir
Posts: 88
Joined: Thu Jan 21, 2021 1:38 am

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by bogcir »

As people have already mentioned, estate planning. He will have to pay estate tax regardless. Not sure if he's married, but he's got $11.7MM in estate tax exemption now. After 2025 it'll be ~$5MM. If he does nothing, that's about a $15MM tax bill right there if he dies before 2025. $18MM+ after 2025.

Since he's liquid, not doing anything is a possible choice, and just pay the taxes.

I question the desire to go into real estate. That seems like work. And unless he has a lot of real estate experience and enjoys it, I don't really see the point.
dbr
Posts: 35966
Joined: Sun Mar 04, 2007 9:50 am

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by dbr »

bogcir wrote: Tue May 11, 2021 11:23 am
I question the desire to go into real estate. That seems like work. And unless he has a lot of real estate experience and enjoys it, I don't really see the point.
Yes, it could be a retirement pastime for a person who has spent their life in business and wants a business to run or be involved in. But someone would have to ask the individual involved.
mdigital
Posts: 3
Joined: Fri Jan 01, 2021 9:52 am

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by mdigital »

Maybe consider starting a charitable trust and giving back to those less fortunate. Maybe providing grants or scholarships to worthy entrepreneurs. Leave a legacy beyond heirs and inspire the next generation
invest2bfree
Posts: 238
Joined: Sun Jan 12, 2020 9:44 am

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by invest2bfree »

Always passive wrote: Mon May 10, 2021 11:34 pm I know, the advise is to invest immediately, but the situation here is a bit different. My dear friend (I know him for 40 years) sold his company that he built from scratch and got about $50 million cash. Now sitting in the bank. he is 75 years old now.
He is very comfortable with passive investing and wishes to invest this money that way.
The big question is that he feels that the market has gone wild and is very fearful that it will correct sooner than later. And who wouldn’t!
So what should his strategy be?
He wants to build 2 buckets, one to live from, the very boring bucket on about $5 million: 80% inflation protected fixed income, maybe a ladder, and 20% in equities.
The other bucket, $45 million, is most likely inheritance (inside a trust) Out of this money, he wants to invest about $10 millions in real estate (not REITs) and the rest in indexes.
Does anyone know of a similar situation and can give advice? I know what the theory says, but real examples are always much more useful.
So the questions are: what should his second bucket allocation be? And how to deploy the cash? This is his dilemma!
I would add another question: what should he do to answer his tough questions? Is there a process?
By the way, he does not trust professional advisers/bankers, and for good reasons.
Much thanks for the help.
I would go for as much diversification as possible.


25% VTI, 25% VXUS, 25% GLD, 25% TLT

It provided the best risk adjusted returns, was down only 22% in 2008 time frame.

https://www.portfoliovisualizer.com/bac ... tion4_1=25
1/3rd VTI, 1/3rd VXUS, 1/3rd EDV 401k: 1/3rd FZILX, 1/3rd FZROX and 1/3rd FNBGX
User avatar
David Jay
Posts: 11092
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by David Jay »

dbr wrote: Tue May 11, 2021 11:39 am
bogcir wrote: Tue May 11, 2021 11:23 am
I question the desire to go into real estate. That seems like work. And unless he has a lot of real estate experience and enjoys it, I don't really see the point.
Yes, it could be a retirement pastime for a person who has spent their life in business and wants a business to run or be involved in. But someone would have to ask the individual involved.
Sure, why not. If that is what he wants to manage for personal fulfillment, take perhaps 5 million and go for it. Put another 5 million in the bank/T-bills for living expenses. Put $40 million into a professionally managed trust.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
iamblessed
Posts: 1096
Joined: Sat Jun 09, 2018 11:52 am
Location: St. Louis

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by iamblessed »

helloeveryone wrote: Tue May 11, 2021 12:14 am Just a thought - keep it simple. put it all in Wellington fund. 70:30 stock:bond. Live off dividends. Reinvest the rest. Or pick 2-3 fund portfolio and AA if want to be little more hands on.

He’s 75. Regardless of what he does he will not run out of money. It a simple approach. Why stress about where along the market graph he is investing in at this point in time. Whether he has 5 good years, 15 good years, 30 good years of life etc… money is no longer a concern. Any “tweaking” ultimately will just impact what he leaves behind for family or charity.
Put 5-10 Milllion in Wellington give the rest away now. That should make Wellington tax free for life.
User avatar
Mullins
Posts: 193
Joined: Wed May 08, 2019 4:38 pm

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by Mullins »

Warren Buffett's plan for his wife comes to mind, a broad market index fund, such as a S&P500 fund, a smaller percentage in fixed income, and for the same reasons Buffett explains.
dbr
Posts: 35966
Joined: Sun Mar 04, 2007 9:50 am

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by dbr »

Mullins wrote: Wed May 12, 2021 12:09 pm Warren Buffett's plan for his wife comes to mind, a broad market index fund, such as a S&P500 fund, a smaller percentage in fixed income, and for the same reasons Buffett explains.
Indeed. In fact retiring on $50M might be about the same ballpark as the personal fortune Mrs. Buffett might have. But I also think Mr. Buffett considers it almost an obligation to participate in the growth and productivity of the American economy represented by S&P 500.
Iorek
Posts: 1291
Joined: Fri Mar 08, 2013 9:38 am

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by Iorek »

Luckywon wrote: Tue May 11, 2021 1:20 am Estate planning with a competent trust and estates lawyer will probably prove at least as consequential to heirs as how he invests his money at this point.
I agree with this— he might actually want to buy a whole life policy with a chunk.
GetSmarter
Posts: 138
Joined: Tue Oct 02, 2018 11:49 pm

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by GetSmarter »

I'd create a foundation to give to worthy causes: Support the environment, health research, create scholarships for high school and college transfer students... So much good could be put to use with that kind of money. At least a large chunk and the rest to heirs. My 2 cents.
“The more simple we are, the more complete we become.” August Rodin | | “The less I needed, the better I felt.” Charles Bukowski
User avatar
ruralavalon
Posts: 21449
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by ruralavalon »

Always passive wrote: Tue May 11, 2021 4:43 am
dogagility wrote: Tue May 11, 2021 4:37 am I suggest he have a chat with a fee-only financial advisor. Someone like Rick Ferri comes to mind.

He has two portfolios. His and his heirs. Each should have their own asset allocation and investment strategy. His might be more conservative compared to his heirs.
Good point. I plan to discuss the issue with Larry Swedroe. I have talked to him a few times in the past about my situation, i.e., expat with limited access to US investments, no funds, just ETFs. My friend is in the same situation. Larry has been very helpful.
That's a very good idea.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
123
Posts: 7413
Joined: Fri Oct 12, 2012 3:55 pm

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by 123 »

Since he has "won the game" and appears to have more than he will ever need a case could be made that he should be 80% to 100% in Vanguard Total Stock Market (VTSAX or VTI). Sure he could try individual hit or miss real estate deals or a few stock picks but with that size of portfolio just market returns should be fine.

If he needs specific investments for purposes of daily conversation perhaps he should set aside $500K - $1M and buy into a race horse syndicate and leave everything else alone in VTSAX.
The closest helping hand is at the end of your own arm.
OldBallCoach
Posts: 550
Joined: Mon Dec 10, 2018 5:22 pm

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by OldBallCoach »

I deal with athletes in this type of deal a lot...first thing is get a really good accountant/tax planner...then hire a planner that you can pay once a year or so to give you some guidence. Then block out all the noise and follow the plan...rinse and repeat yearly...
fourwheelcycle
Posts: 1188
Joined: Sun May 25, 2014 5:55 pm

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by fourwheelcycle »

OK, how many people on this forum, of those who are online right now, have $45M invested in the stock market? Let's say five people. Every day that those five people do not sell 100% of their holdings, they are effectively investing $45M again - at today's "scary high" market levels that may correct, or continue going up, at any time.

For his long-term horizon $45M, I suggest your friend should put 90% of it, tomorrow, in the 500 index and total stock market index. He should put the other 10% in US total bond market index and US intermediate-term bond index. This AA is more conservative than Yale's. Yale does have more than $45M, but I believe Yale is about 93/7.
User avatar
White Coat Investor
Posts: 15266
Joined: Fri Mar 02, 2007 9:11 pm
Location: Greatest Snow On Earth

Re: Dilemma: what to do with a large amount of cash at the age of 75?

Post by White Coat Investor »

Always passive wrote: Mon May 10, 2021 11:34 pm I know, the advise is to invest immediately, but the situation here is a bit different. My dear friend (I know him for 40 years) sold his company that he built from scratch and got about $50 million cash. Now sitting in the bank. he is 75 years old now.
He is very comfortable with passive investing and wishes to invest this money that way.
The big question is that he feels that the market has gone wild and is very fearful that it will correct sooner than later. And who wouldn’t!
So what should his strategy be?
He wants to build 2 buckets, one to live from, the very boring bucket on about $5 million: 80% inflation protected fixed income, maybe a ladder, and 20% in equities.
The other bucket, $45 million, is most likely inheritance (inside a trust) Out of this money, he wants to invest about $10 millions in real estate (not REITs) and the rest in indexes.
Does anyone know of a similar situation and can give advice? I know what the theory says, but real examples are always much more useful.
So the questions are: what should his second bucket allocation be? And how to deploy the cash? This is his dilemma!
I would add another question: what should he do to answer his tough questions? Is there a process?
By the way, he does not trust professional advisers/bankers, and for good reasons.
Much thanks for the help.
He needs an estate plan. Probably before an investing plan. I'd sort that out first.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
Post Reply