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Question for the Money Doctors

Question submitted on Mar 9, 2011.

Question

My husband and I just sold a piece of property. We will net 1,000,000. We are both 60 and he will soon retire. He has a reasonable retirement which should be enough for our basic needs. We would like to invest the 1,000,000 so that the earnings will priovide us with a few "extras". We are not willing to take much risk. Where should we put this money?

Answer

I am of the opinion that an investor should stay diversified to minimize risks.  CDs and short-term bonds alone, while safe, will not generate much income in today's intererst rate environment.  I would consider a diversified portfolio of stocks, bonds and alternatives.  A reasonable very conservative allocation might be something along the lines of 20% stocks, 10% alternatives and 70% bonds.  Within the stock category be sure to include US, Foreign, large, small, value and growth.  Within the bond category, consider including, US, Foreign, short & intermediate.  In the alternative category, consider real estate and a diversified commodities fund.

Again, the important thing is to stay diversified with your portfolio.  Nothing is guaranteed, except for FDIC insured CDs and treasuries which are paying next to nothing right now.


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