Getting $1Million, how to make it last

**srblanco7** · 02-22-2009, 12:25 PM

the rule of thumb is 4% per year.

**kork13** · 02-22-2009, 12:35 PM

A very simple option would be to put it into a CD ladder... Basically, it's a series of varying-term CD's, like at 1-, 2-, 3-, 4-, and 5-year terms. As each one matures, just roll it over into a new 5-yr CD. You could set them up such that you recieve monthly dispursments of the interest they gain, which would effectively provide you a steady income. At a modest 4% APY, you would get about $3300/mo in interest.

That's just the simplest, and perhaps the safest option... There are many other ways to handle a large inheritance, so definitely do your research. One last thing... If/when you go to see a financial advisor, use one who works for an hourly fee--meaning he does not receive a commission based on what you do with your money. FA's like that frequently try to sell you on investments/savings vehicles that are not necessarily in your best interest (and are very much in his own best interest). You need to get unbiased advice.

**swanson719** · 02-22-2009, 01:21 PM

The main issue is keeping this money from being taxed. You could pay up to 41% federally on this, not to mention state taxes. The CD ladder is great, but it would require drawing out the lump sum to set up, and the $3,300 a month assumes a million dollar investment. Reducing taxes on this should be your primary concern - secondary is making money on it. Once you have it, make sure you invest as much into your 401K that your employer will match, then max out your Roth IRA every year, and take the rest and find either tax free or tax deductible investments.

Another thing to look at would be real-estate, especially with the market as soft as it is.

No matter what you decide to do, you need to make sure you educate yourself on tax laws. Talk to a flat rate or hourly estate planner, not so much a financial adviser. The estate planner will tell you how to keep things from being taxed and what investment vehicles will help you in that area the most. The financial adviser will tell you what in those investment vehicles are most beneficial to your particular situation.

If you invest this money right and just keep up with the market - which averages just under 12% annually since 1935, you should have roughly $100 Million when you turn 63 without investing anything else the rest of your life.

**disneysteve** · 02-22-2009, 05:15 PM

Although the CD ladder would work, swanson719 is correct that you need to consider taxes. A better option might be municipal bonds. I don't know enough about them to give details, but I know that you can invest in ones that are free of taxes.

**Rainelli** · 02-22-2009, 05:20 PM

in this point of time,economic crisis is still heading on, no matter how hard we wanted to budget it,this won't last long,unless you put up a business.

**Broken Arrow** · 02-22-2009, 06:16 PM

Long answer short, find yourself a good, reputable, and fee-only financial adviser!

You'll most likely want to spread your money out to at least a few different asset classes, depending on your overall financial picture, and your short, mid, and long term goals.

Perhaps we can talk more, but I wouldn't be comfortable doing so without knowing more details about the situation.

Anyways, good luck!

**disneysteve** · 02-23-2009, 05:05 AM

Originally posted by shawn0811 View Post

I am 24, and just want monthly payments to increase my monthly income.

I just want an idea, I am speaking to an FA in few weeks

I'd want to know why a 24 year old needs to tap this money now. Are you able to work and earn a living? If someone handed me $1 million today, I'd invest it to help secure my future and allow me to retire a few years sooner.

Make sure the Certified Financial Planner who you select is a fee-only planner, meaning he/she doesn't earn money by selling you specific investments.

**jIM_Ohio** · 02-23-2009, 05:22 AM

Look for a CFP designation on whoever gives you advice.

A tax advisor might have a CFP
A financial advisor might have a CFP

But a tax advisor is not required to have a CFP, and neither is a financial advisor. Look for a CFP (certified financial planner) because by certification they have knowledge of insurance, taxes, inheritances and investing (in stocks, bonds and other financial instruments).

If you contact an insurance agent they will sell you one of the products they have available to them. Annuities or life insurance...
If you contact an investment advisor, they will sell you one of the products available to them. Stocks, bonds or mutual funds...

How would you know if an annuity is better or worse than the bonds offered by one or the other? You need someone which knows both- and a CFP guarantees they know the ins and outs of BOTH occupations.

**bjl584** · 02-23-2009, 11:16 AM

If possible, don't touch it. Invest it and tax shelter it the best that you can. By the time that you are 60 you'll have an absolute fortune on your hands.

**sweeps** · 02-23-2009, 11:18 AM

Buy 400,000 shares of Citibank stock.

**Hot dog** · 02-23-2009, 12:10 PM

oh to have such problems

**jIM_Ohio** · 02-23-2009, 12:16 PM

You did not mention what your expected annual expenses are.

In General you can withdraw 4% from a pool of money and have it last 30 years.

Meaning if you take out 40k from $1 M, it will last 30 years.

Want money to last longer (like 50 years?) then lower the percentage I'd go with 2.5% ($25k per year) and expect money to last 50 years.

The longer the money will last, the more exposure to equities you will want (to combat inflation).

30 years is probably a 60-40 allocation
20 years might be 40-60 allocation
50 years is probably an 80-20 allocation

allocation expressed in terms of % stocks-%bonds/cash

**isthisused** · 02-23-2009, 05:09 PM

I would consider buying a very modest home(this is a great time to buy) then invest the rest in a well diversified portfolio, and forget about it for the next 20 years. Then come back on this forum and ask. How can I retire now with this 4 Million that I have. Or in 30 years with 8 million

**wincrasher** · 02-23-2009, 05:11 PM

All great advice.

Avoiding a big tax hit initially will be the biggest challenge.
Be wary of financial advisers that profit on your investments or earn commissions.
Build a diversified portfolio of investments.
Don't chase gains that have excessive risk. Don't try to time markets.

It probably took whoever is leaving this money to you a lifetime of hard work to accumulate. Show your respect for that by not squandering it and being very cautious about how you invest it.

Getting $1Million, how to make it last