[USER]

My wife and I have run a successful business for 25 years and now before my 50th birthday we are ready to fire.

I really hope we can do this successfully. Have about $1.7m in HYSA. $400k in crypto and about $1.7m in stocks.

401k is about $800k. House is paid off and valued at about $2.5m we have an investment property that is paid in full and generates about $40k per year and a commercial building we will sell for about $3.4m and owe about $110k on the mortgage.

Have 2 kids. 18 & 19 will probably not go to college and will live at home for ever.

One runs their own business and one is on last year of high school.

I know this is a lot but we don’t want to downsize anytime soon. House costs about $20k per year for taxes, $10k per year for insurance.

About $18k for utilities, lawn, pool, etc
Really looking for advice on how to make the money grow and last.

Have looked into a financial advisor but that does not feel right. Annuities look good but don’t want to lock up money. Will probably cash out crypto on the next surge.

Any advice on how to really generate 6-8% somewhat safely?

Would love to hear real world advice.

I figure by the time we can take ss and 401k we will downsize by then.

[Joe]

That 1.7M in HYSA. Leave a years worth of living expenses in there and invest the rest

[Lena]

I would either invest more into real estate as it is an asset that will pay you in multiple ways, rental income, depreciation as tax deductions, and appreciation.

Have a good property manager run it if you don’t want to.

And I would look into being a private money lender for real estate investors.

You get double digit returns on your money.

[Farris]

Buying more real estate is a no brainer. Learn it, and buy it.

[Charles]

Very nice portfolio, I think you could move a big portion to value/ dividend stocks and get over 200k passively. 1.5m stocks+1.5m hysa + 3M from commercial building =6m to utilize, that 6M at 3.5% dividend yield should be enough for your family to keep the same way of life.

Plus, it will snowball over time significantly, most of these stocks are not as susceptible to big market swings.

[Daryl]

An alternative idea is to but about 1 million into short term US gov bonds and the rest in the S&P 500.

In good times you sell shares of the S&P for you needs and in bad times you sell your bonds.

Taking into account that the S&P average increase is 10% can will only grow richer while being easily able to spend what you need

[Jason]

Why not lease out the commercial building or exchange into one you like better?

The income from that should be plenty if you keep everything else just like it is.

Plus, you get the appreciation and depreciation.

[David]

You are in great shspe with over $6 million plus a paid off home.
This is what I would do: Put most of it in s and p index funds, some in bonds, sell half the crypto, way too much in hysa, maybe pick up a few additional rental properties (don’t pay cash for, maybe put 30% down), don’t own so many individual stocks (again put it in s and p 500 index or total market).

You could pull as little as 2% or so from the index funds, plus add in some rental income and easily be around $150,000+ annually.

[Laila]

Maybe watch some videos on why selling stocks is better than relying on dividends, in terms of your ultimate wealth?

Rob Berger has a video on this.

To address concerns about needing to sell equities in a down market, I feel that you could continue having several years worth of expenses in cash like instruments, like you currently do.

YouTuber, Joe Kuhn, is very conservative, and he explains how you can build a portfolio based on a bucket strategy.

If you stay with a large cash-like bucket like he has and you currently have (probably too large), then you can still keep the majority of your funds in inexpensive broad market index funds like VTI, which have been generating about 10% annually, on average.

As long as your VTI/index fund money is able to be in the market for at least 10 years, you could expect similar average annual returns (10%), if the last hundred years of history, continues playing out as it has historically.

Maybe with a flat fee financial advisor, you can really sit down and do the math together, so that you can see how the numbers would play out, if you merely were receiving dividends, versus occasionally selling some of your index fund shares, in order to withdraw money.

In the end, you can have more money and just as much safety… Even if you occasionally sell shares.

Many investors have been doing this successfully for many years, and in order to live off dividends, not only will the growth of your wealth be slower, but you will need a much huger nest day, in order to only live off of the dividends versus occasionally selling some stocks.

[Maribel]

Look into infinite / cashflow banking/insurance. You can borrow against the policy and it keeps yielding. Use that cash for cashflow

investments or private lending.

[Steve]

with $8M excluding primary home I don’t think you need to do any hard thinking how to FIRE.

I’m not even counting $40K per year in rental income

[Samarth]

First of all congratulations on the milestone. I’m sure you probably have already considered this, but could buying and managing a apartment complex work?

Another route could be private money lending.

Or putting it towards a passive syndication. Just some ideas to explore.

[Gary]

I would recommend to hire a financial advisor by the hour. Or a flat fee financial advisor. Hire someone good.

Even if it costs you $5000 or more it’s worth it to be allocated correctly.

They can help you make up that fee and then some.

The key is to not pay 1% of funds, yet flat fee for services will save you money and taxes in the long run.

[Chris]

6% is pretty easy and a safe estimate for the stock market with index funds.

It’s good that you’re also diversified into real estate just in case.

[Rick]

The only option is to sell the kids, sell the cars, sell the house, and live on rice and beans!

With a $10 million net worth, I think you’ll be just fine.

Just throw it into a total market index fund and it’ll give you the returns you’re looking for.

Congratulations to you and your wife!

[Rob]

Independent of whether the risk/return is correct for that money, $1.7M in HYSA worries me. Unless you have it spread out between multiple accounts, only $250k is FDIC insured.

The risk of Individual banks going under these days is non-trivial.

If you are looking for HYSA like returns for a large amount of money, then just buy short term treasuries.

The easiest way to do that is through an ETF such as “iShares Short Treasury Bond ETF”.

[Nick]

Well done. I’m curious, what kind of business and are you selling it?
I have a friend work way North of you and best advice he ever gave me was to use Vanguard index funds. We use VFIAX.

People will talk about the down decade, honestly, the S&P is consistently going up.

I don’t trust brokers and their commissions. This is also the advice the Buffet gives to “normal” people on how to invest.

As was said, keep a year in HYSA for only emergencies, live off dividends and your rental income. You could rent out that commercial building too, keeps you in a better tax situation.

Great job.

My wife and I also run a small business was and plan on selling it at some point, but we are banking on out investments.

Trying to get to $4M in the accounts before we retire. We also have on rental, but no commercial building.

[Darin]

1.7 in hysa? Waiting for the inevitable dip in the stock market? I’m in a similar situation and that’s my thought but don’t know if I’m right.

I don’t look at it as trying to time the market but rather diversification.

But to be honest yes I might be waiting…

[Bre]

Potentially downsizing in price of the home by remaining at the same size but to a lower cost of living new state / part of the same state you are in now.

You can obtain the cash and pay off your new property with also not having to worry about the 110k you owe. This should decrease your property taxes/home insurance / housing costs /etc if you vet the home and state property strategically to your liking.

That will be the first blue print to you annual financial need
Next is figure out your wants … fun monies/support for your adult children/ life and health insurance policies/ vacations/ clothing/shopping /lifestyle and food budget

This fill factor into your annual spending then broken into your monthly income

Last figure out your genetics, what runs in the family, how long do your family members typically live

This will give you a estimate of how long you need your monthly income for and when you expect to shift to a higher income due to health deteriorating

Now you can decide if your interest rates / general income producing assets are enough to last you to the end and take care of the two children after you go if that’s your jam or if you need to sell / reallocate to get to your fire number
Good luck

[Marc]

You should talk to a few financial advisors and find one you like. If you don’t like an AUM model, find a fee only financial advisor.

You’ve done very well – an advisor can help you walk through your goals and how to get there.

Just to give you an idea, an $8 million portfolio wisely invested in equities and bonds can allow you to draw 4-5% of the total ($320k to $400k) and likely never run out of money.

I’m not a fan of annuities, dividend stocks, crypto or other things mentioned here for long term financial health.

I’d find someone you like who is teaching you the why of the plan and investments that they propose. Best of luck

[Russell]

You have about $6.8M in cash, stocks, and crypto once you sell that property.

Sell the crypto. It’s too volatile for a retirement asset.
Consider looking into the “3 bucket strategy.”

You say you don’t want to sell assets to generate the money you need. My primary advice would be to accept that selling stocks is okay.

Total returns on growth funds almost always exceeds total returns on high dividend funds.

The difference is you need to sell to harvest some of those returns as income.

The advantage is that the capital gains from selling stocks is taxed lower than regular income. Dividends are complex, but some are considered income and taxed at that rate.

That’s not as big of an issue for lower budget retirees, but you’re going to be in a high tax bracket. Capital gains rates save you money.

If you REALLY don’t want to sell, putting most of your non-cash assets (and limit cash to 1 year of expenses) into a dividend fund like SCHD should yield you about $200k per year in dividends passively.

[Author]

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