Investing large sum of money for max income

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Originally Posted by Pooh

Are you saying the mortgage on his house is near $750k too? Yeah, no way he's retiring in that place with only $500k.

Have him open an account at Fidelity. Take that $500k and buy roughly 125k shares of IVH on triple margin. That many shares will get him $15,625 per month in dividends. Margin interest run him around 4k per month so he'd be able to live on like $11k per month before taxes. That plan would work well for him....until it doesn't.

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No I mentioned earlier he has about 200k equity. Only owes about 500k on it. Worth minimum 700k, just to be safe.

But think about it even at a 2.2% yearly appreciation rate he makes an additional 75k over 10 years, even factoring in the property taxes. And he obv will be paying the house down during that time too, probably by another 30k(total guess, but probably close). Add all that to the current equity and he has 300k more to work with, unless the housing market crashes.

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Originally Posted by Pooh

Are you saying the mortgage on his house is near $750k too? Yeah, no way he's retiring in that place with only $500k.

Have him open an account at Fidelity. Take that $500k and buy roughly 125k shares of IVH on triple margin. That many shares will get him $15,625 per month in dividends. Margin interest run him around 4k per month so he'd be able to live on like $11k per month before taxes. That plan would work well for him....until it doesn't.

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Holy shit 11%

if you dont want to kill your father you can always make him think he is losing his mind and then put him in the cheapest nursing home you can find until one of the nurses kills him

start by moving things around his house, hiding his keys, etc

then you can escalate by making up things that he told you, show up with 2 watermelons and pretend he told you to buy him two watermelons

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Originally Posted by NaturalBornHustler

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Originally Posted by Pooh

Are you saying the mortgage on his house is near $750k too? Yeah, no way he's retiring in that place with only $500k.

Have him open an account at Fidelity. Take that $500k and buy roughly 125k shares of IVH on triple margin. That many shares will get him $15,625 per month in dividends. Margin interest run him around 4k per month so he'd be able to live on like $11k per month before taxes. That plan would work well for him....until it doesn't.

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No I mentioned earlier he has about 200k equity. Only owes about 500k on it. Worth minimum 700k, just to be safe.

But think about it even at a 2.2% yearly appreciation rate he makes an additional 75k over 10 years, even factoring in the property taxes. And he obv will be paying the house down during that time too, probably by another 30k(total guess, but probably close). Add all that to the current equity and he has 300k more to work with, unless the housing market crashes.

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eerrrrrr dude, you are forgetting inflation and mortgage IR he's paying. That 2.2% appreciation is more like -3.3% depreciation. that additional 300k in 10yrs will be worth FAR less than you think. He's living way out of his budget. 500k can be stretched out for a longgggg time assuming you keep your expenses low, this does not seem like the case.

Honestly, he should seek the help of a real professional (Daly approved), get a side job for 3-4 yrs making pennies but total return on his SS will be much better and then once he is legit retired he should get an off the books job.

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Originally Posted by NaturalBornHustler

So my father recently sold one of his businesses, and he is due to get the remaining balance of about 500k in October for the final payment. He is 61, and needs to use that money to provide income for the rest of his life. Needless to say he has never had that much liquid cash at any point, his money has always been tied up in something or the other.

At my age I really don't know much about investing for income/cash flow now or investing at that age, so what options should he consider? We are going to lean to the more safe choices, at this point of his life he isn't going to do anything too risky. Just wants steady and stable cash flow.

I told him he gives it to me I'll make him 30% every year but he won't go for that unfortunately :)

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Everyone seems to be stuck on this 500K thingy.

Just for clarification, he has more than that correct? The 500K was just part of the money, no?

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Originally Posted by handicapme

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Originally Posted by NaturalBornHustler

No I mentioned earlier he has about 200k equity. Only owes about 500k on it. Worth minimum 700k, just to be safe.

But think about it even at a 2.2% yearly appreciation rate he makes an additional 75k over 10 years, even factoring in the property taxes. And he obv will be paying the house down during that time too, probably by another 30k(total guess, but probably close). Add all that to the current equity and he has 300k more to work with, unless the housing market crashes.

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eerrrrrr dude, you are forgetting inflation and mortgage IR he's paying. That 2.2% appreciation is more like -3.3% depreciation. that additional 300k in 10yrs will be worth FAR less than you think. He's living way out of his budget. 500k can be stretched out for a longgggg time assuming you keep your expenses low, this does not seem like the case.

Honestly, he should seek the help of a real professional (Daly approved), get a side job for 3-4 yrs making pennies but total return on his SS will be much better and then once he is legit retired he should get an off the books job.

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Mortgage "IR"

What in the hell are you talking about?

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Originally Posted by Hockey Guy

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Originally Posted by NaturalBornHustler

So my father recently sold one of his businesses, and he is due to get the remaining balance of about 500k in October for the final payment. He is 61, and needs to use that money to provide income for the rest of his life. Needless to say he has never had that much liquid cash at any point, his money has always been tied up in something or the other.

At my age I really don't know much about investing for income/cash flow now or investing at that age, so what options should he consider? We are going to lean to the more safe choices, at this point of his life he isn't going to do anything too risky. Just wants steady and stable cash flow.

I told him he gives it to me I'll make him 30% every year but he won't go for that unfortunately :)

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Everyone seems to be stuck on this 500K thingy.

Just for clarification, he has more than that correct? The 500K was just part of the money, no?

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500k is the last payment.

He got an initial payment, paid off any and all business/personal/tax debt.

Been living on the payments from new owner that are about to end for past 3 years.

But basically it is the 500k plus house equity of 200k left. Plus SS monthly when that kicks in.

What are the monthly mortgage payments including tax and insurance?

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Originally Posted by Pooh

What are the monthly mortgage payments including tax and insurance?

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Think around $2500. It might even be less.

It was like $3500, but then Ocwen modified it due to the class action judgement against them and it dropped an insane amount. That is why I thought it was a scam when he told me about it, because it just wasn't adding up. They knocked him down to like 2% or something ridiculous I think from the original 5% or something.

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Originally Posted by NaturalBornHustler

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Originally Posted by handicapme

eerrrrrr dude, you are forgetting inflation and mortgage IR he's paying. That 2.2% appreciation is more like -3.3% depreciation. that additional 300k in 10yrs will be worth FAR less than you think. He's living way out of his budget. 500k can be stretched out for a longgggg time assuming you keep your expenses low, this does not seem like the case.

Honestly, he should seek the help of a real professional (Daly approved), get a side job for 3-4 yrs making pennies but total return on his SS will be much better and then once he is legit retired he should get an off the books job.

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Mortgage "IR"

What in the hell are you talking about?

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Interest Rate... you know the thing you have to pay when you borrow money????? So a house appreciating at 2.2% a year, with inflation and your INTEREST RATE on your mortgage, you are actually losing money the longer you hold.

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Originally Posted by handicapme

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Originally Posted by NaturalBornHustler

Mortgage "IR"

What in the hell are you talking about?

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Interest Rate... you know the thing you have to pay when you borrow money????? So a house appreciating at 2.2% a year, with inflation and your INTEREST RATE on your mortgage, you are actually losing money the longer you hold.

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OK that is what I thought. My point was he could still gain more money down the road from the house.

And he has to pay to live somewhere even if he doesn't have the mortgage, so he is basically laying out that money either way every month.

I guess depends how you look at it, but I see what you are saying.

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Originally Posted by handicapme

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Originally Posted by NaturalBornHustler

Mortgage "IR"

What in the hell are you talking about?

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Interest Rate... you know the thing you have to pay when you borrow money????? So a house appreciating at 2.2% a year, with inflation and your INTEREST RATE on your mortgage, you are actually losing money the longer you hold.

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Now now be nice. I didn't know what the hell you were referring to either. Interest is deductible and his interest rate is so low that the mortgage is probably a good thing. That said, 500k isn't even close to enough to retire on for his father unfortunately. It would be a stretch even if the house was fully paid off.

Smartest thing he could do is dump the house, take the equity and buy a house for 200k free and clear. Then he has a chance. Problem is this is the dream house and people rarely do the smartest thing.

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Originally Posted by NaturalBornHustler

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Originally Posted by handicapme

Interest Rate... you know the thing you have to pay when you borrow money????? So a house appreciating at 2.2% a year, with inflation and your INTEREST RATE on your mortgage, you are actually losing money the longer you hold.

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OK that is what I thought. My point was he could still gain more money down the road from the house.

And he has to pay to live somewhere even if he doesn't have the mortgage, so he is basically laying out that money either way every month.

I guess depends how you look at it, but I see what you are saying.

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sorry if I was mean. I get what your saying, but why doesn't he move out now rather than 10yrs later? Buy a smaller place and pay it in cash and have 0 interest payment what so ever??

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Originally Posted by Pooh

Smartest thing he could do is dump the house, take the equity and buy a house for 200k free and clear. Then he has a chance. Problem is this is the dream house and people rarely do the smartest thing.

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It's amazing to me how people become attached to a house. I'm in a 3/2 with a pool and all the trimmings.... I can't wait to dump this thing. The second my kid moves out (in ten years) I'm going right to the beach for half the cost.

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Originally Posted by NaturalBornHustler

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Originally Posted by Hockey Guy

Everyone seems to be stuck on this 500K thingy.

Just for clarification, he has more than that correct? The 500K was just part of the money, no?

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500k is the last payment.

He got an initial payment, paid off any and all business/personal/tax debt.

Been living on the payments from new owner that are about to end for past 3 years.

But basically it is the 500k plus house equity of 200k left. Plus SS monthly when that kicks in.

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I was just assuming that he had way more than that from the OP.

I see no scenario where he is any position to retire & live on the income from 500K unless he did some very high-risk stuff & happened to hit it out of the park.

I have substantially more than that right now plus a relatively new home free & clear & don't feel I can even come close to retirement yet. Granted I am 10 years younger & I'm talking Canadian currency but still.

Lot of good advice here already along with a few stupid things.
But you are better off listening to the richer people on this subject. I would suggest:

1. Sell the house, downsize, cut the monthly nut however you can. Add this money to the retirement bankroll.
2. Speak to a financial advisor and get ideas, but not necessarily sign up. Look at all the horror stories of people getting screwed.
3. As pooh said get a fidelity account or vanguard is good too. Invest 1/3 REITs, 1/3 treasury bonds or an etf like tlt, 1/3 in a dividend etf like SDY. I would stay away from bonds because the interest rate hikes will likely cause problems.

If this doesn't make enough to support him, then i would look at something he can rent and keep an eye on like a 2 family house or a place with an extra room but has to be careful who the tenant is. If short on money then he needs to work,rent a room, or run some kind of small business to cover.

BTW is Pops single? If single another angle would be find a rich wife. I know a guy who did it. Got divorced was very bitter, worked out every day to look good. Bought a nice car and clothes to advertise. Hung out in bars up in the hamptons, and scored a rich widow. Plus got to rub it in the face of his ex.

A lot better investment than bitcoin, gold, or buying pieces of a poker player.

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Originally Posted by MumblesBadly

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Originally Posted by NaturalBornHustler

So my father recently sold one of his businesses, and he is due to get the remaining balance of about 500k in October for the final payment. He is 61, and needs to use that money to provide income for the rest of his life. Needless to say he has never had that much liquid cash at any point, his money has always been tied up in something or the other.

At my age I really don't know much about investing for income/cash flow now or investing at that age, so what options should he consider? We are going to lean to the more safe choices, at this point of his life he isn't going to do anything too risky. Just wants steady and stable cash flow.

I told him he gives it to me I'll make him 30% every year but he won't go for that unfortunately :)

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If he uses a financial planner, be sure that planner only charges a flat fee, and does NOT get *ANY* commissions for finders fees for investing. For example, try this site to look for one to scope out.

https://www.napfa.org

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I can make him 2.5k a week for life

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Originally Posted by NaturalBornHustler

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Originally Posted by Texter

Learn to live off his social security for a while.

Until the market takes a dump, then invest in good dividend companies who haven't lowered dividends in decades.

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His SS won't come close to paying his expenses. If he takes SS at 62 the absolute max he can get is $2102 a month. And he probably isn't getting that, maybe $1500. It is expensive as shit to live where we do, that isn't covering much.

After taking in all these responses and thinking about it, he is pretty much going to have to take some risk, or be forced to downgrade his current lifestyle/housing. There is no way what he has coming will sustain him for as long as he needs it to with his current obligations. The house he is in now is worth 750k right on the water and his dream house basically, no way he wants to move. Tough decisions looming me thinks.

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Can he rent the house out during vacation season and stay with you.