general question

There is none. Safe means that you are not willing to risk loss of principal. The only financial tools that do that have a very low return right now. At the same time, the real rate of inflation (ie, the rate that people see, not the CPI that the feds publish) is much higher than the fixed rate of return. As a result, any so called "safe" investment is sure to lose you buying power, which actually makes it the most risky thing you can do.

I'd split it 5 ways, with $25k in each bucket, and $4k left over as a cash emergency fund. Pick a pair of index funds, a growth fund, a dividend fund, and a global fund. Pick names you have heard, and pick funds that own companies that you have heard of.

The market has had a remarkable run over the past few months. It went from around 11,000 to over 12,500 in just a few weeks. That is the whole problem with watching the market when you should be investing for the future. All the short term noise hides the fact that the market has an overall 11% return for about 100 years.

At any rate, don't buy individual stocks. You don't have enough to efficiently buy a big enough basket to be well diversified. Leave that for the billionaires, funds are fine for the rest of us.

-john-

While I generally agree with the recommendation (see below), I don't agree with this analysis. Losing a "safe" one or two percent in net buying power to inflation (after getting a safe fixed rate of return on a savings deposit) is far less risky than potentially losing 10% or more in principal. Risk is not a measure of gain or loss, it's a measure of volatility. A bank account (FDIC insured) is *always* less risky than the stock market, no matter what the inflation rate is, since inflation has a similar impact on both types of return.

For a five year or longer time horizon, this makes sense. But, being self-employed, I'd keep more like $20-30K in the emergency fund. This assumes OP is single with no dependents, and a bunch of other assumptions about the OP's situation that we'd all have to know more about to make really precise suggestions. The biggest question I have is, why look at a 5-8 year time frame? Is the OP planning to stop working at that time?

If you are within the AGI limits, consider converting that trad. IRA to a Roth, but only up to the point where it pushes you into the next higher tax bracket. Paying the income taxes up front now on this money is an "investment" with little downside, plus five years after the conversion, you will have the option to withdraw the money without penalty, instead of waiting until retirement age. Search the group archives for more details on this.

In fact, being self-employed and over age 50, you could also look into socking away a large annual amount into retirement (solo 401K or other Keogh-type plan) and making up the difference with some of your savings

-- in other words, getting the money out of short-term savings and into longer term, tax-deferred or tax-free retirement accounts. You can still invest in the types of funds John suggests, but from within the retirement account. On the other hand, you are close enough to retirement age that the benefits of these types of accounts will be more limited than if you had a 20-30 time horizon.

And don't forget Health Savings Account, if you don't already have one.

-Mark Bole

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After putting $25k into an emergency fund, leaving $100k to invest, I'd be pretty wary of putting this guy's entire remaining portfolio into equities. I suspect that he'd be pretty uncomfortable with the volatility of a 100% equity portfolio and would probably temper it down to more like

70% equity and 30% fixed income. Or, to make things a little simpler, 75/25 - with that 25% in something like short term investment grade corporates (if he's in a very low tax bracket) or in a short-mid term muni bond fund (if he's in a higher tax bracket). The remaining 75 could be split into 3 or 5 index or index-like funds pretty easily in a wide variety of ways.

Good question - if he's got a specific purchase in mind after that (relatively) short period of time, then something even more conservative might be in order. If it's long-term retirement money, then I'd certainly go no less than 60% equities, starting with as much as 70 or 75% and shifting towards 60/40 as he gets closer to the ending date. If he's planning on making the whole thing last for 30 years (which, if he's retiring at 60, he needs to plan for), with a conservative payout, he still probably shouldn't plan on going less than 50-60% equities by the time he retires.

Very good call. And contributing more to it during the next few working years, even if doing so means pulling money from the taxable account along the way to do so.

Depending, of course, on how his health insurance is already covered.

Thank You all for the replies. Yes I am wondering about early retirement to SE Asia from USA. Initially I thought about putting this money into another home & resell after 2 years.Which is what I do best

But the market here is also slow which is still not so bad for me as I build for less than most can but.............. I was curious about other things like the Vanguard Wellington Fund investor shares (VWELX) I had read a bit about. Something with a small payout would be nice.

As for health insurance I have a private policy I pay for myself now. I would also but insurance if I retired to SE Asia.

I guess I am pretty up in the air right now & have no clear direction as I am not 100% sure I will retire at 59-60 or not. Or that I can for that matter. Cost of living is much less there but still.

I will read back in this group & see what I can learn about the investments you all mention

Thank You

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