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Old 04-10-2016, 14:39   #1
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Best investment while we travel

Any investment guru around?
Next month we start to convert all our investment to cash...
I investigate and I feel really comfortable with an annuity.. it's low but safe...
How you invest your hard-earned money for a long travel? We planned go out the next 4 years and after that, mostly I gonna be completely retired.
Suggestions, suggestions... Number to invest is around 500K
Thanks you in advance
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Old 04-10-2016, 14:51   #2
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Re: Best investment while we travel

buy coke KO....or 3M.....as safe as its going to get and pays dividends......but hey what do I know....
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Old 05-10-2016, 05:48   #3
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Re: Best investment while we travel

You're going to get all kinds of answers. Some of them might be appropriate for you. Some, almost certainly, will be wildly inappropriate. That is the nature of internet discussions about investments. The most important thing to remember is that the advice you get will be worth exactly what you pay for it -- NOTHING!

If you do not have the knowledge to decide on your own investments, then you really should find a financial planner that you can trust. Without spending time talking to you about the details of your situation, no one can structure an investment portfolio for you. Here's a good article about choosing a professional to help you... How to Choose a Financial Planner - Personal Finance - WSJ.com

All that said, if you aren't willing to spend time and money with a professional, you might consider a balanced mutual fund that invests in a mixture of stocks, bonds, and cash instruments. An "all-in-one" fund, as it were. One of the Vanguard LifeStrategy funds would be a good example.

Good luck.
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Old 05-10-2016, 05:52   #4
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Re: Best investment while we travel

^^^

What he said. But in particular keep in mind that an annuity is a one-time deal: once you're in, you're in for good. The other options allow you to change your mind / adjust for changing needs.
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Old 05-10-2016, 06:00   #5
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Re: Best investment while we travel

All good advice above. I prefer dividend aristocrat stocks, notably MO, BP, PG, SO, or you get all of them via the ETF named NOBL which buys all the aristocrats.


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Old 05-10-2016, 06:28   #6
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Re: Best investment while we travel

Problem with annuities is the fee's will kill ya. Front loads, management fees, etc etc. Keep your money in your pocket.

If you want to play it safe 60/40 stocks/bond split and you can safely withdraw 20,000 (4%) every year. Low cost vanguard funds or equivalent. Re balance once a year if needed. You don't say your age, but depending on your age you might want to be more aggress like a 80/20 split. Although, if you want to be technical 100% stocks will have the best return over the long run. You just need the fortitude and strength not to sell it all when the market tanks. Buy and Hold.

Suggest that you read to learn about investing.
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Old 05-10-2016, 07:31   #7
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Re: Best investment while we travel

Quote:
Originally Posted by David Hughes View Post
All good advice above. I prefer dividend aristocrat stocks, notably MO, BP, PG, SO, or you get all of them via the ETF named NOBL which buys all the aristocrats.
Good advice. I'd pick dividend growth equities over annuities every time.
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Old 05-10-2016, 08:29   #8
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Re: Best investment while we travel

Not being a financial genius myself, I picked a financial adviser I trusted and gave him my money, yes there is a fee, he doesn't work for free.
To my surprise its done better than I expected and averaged 6.8% last year.

I agonized for a long time, still do to be truthful about what to do with it, started with the idea of buying rental property and abandoned that as needing more attention than I was willing or able to give it.
You will as others have said find something that you are comfortable with.
But good news, there is an entire industry wanting to take your money, no shortage at all.
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Old 05-10-2016, 08:31   #9
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Re: Best investment while we travel

If you are gone for 4 years...perhaps real estate properties in choice areas that are recession proof somewhat that generate a good return. You get tax advantages, maintain upside if property appreciates, get a better return than an annuity and with $500K you may be able to purchase several houses for diversity sake and have a realtor maintain your property and collect rent and deposit in your bank account. Many cruisers go this route. Trouble is .... finding good investment grade properties...but they are out there....
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Old 05-10-2016, 08:34   #10
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Re: Best investment while we travel

I buy preferred stocks of bank and insurance companies. Dividend yield is about 6% paid quarterly. The dividends are 'qualified' for tax purposes, thus the tax rate is 15%, not the ordinary income rate.


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Old 05-10-2016, 08:43   #11
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Re: Best investment while we travel

Imho converting all investments into cash prior to going cruising is a mistake. Do you need that much cash? No. So why convert? Do all your present investments have the same horizon and expire now? Unlikely. So why convert?

Keep the investments that still make sound financial sense. Convert the ones that expire, or ones that you do not find financially viable anymore into investments that pay you quarterly semi- or annual flows. Match (time) the flows with your expected needs for travel cash - this is easiest with quarterly flows.

Outsource managing things that you will not be able to control from the boat. Some investments need keeping eye on (e.g. stocks, commodities, derivatives, etc.). If you cannot do this, convert these investments to ones that are less volatile (bonds, indexes, etc.).

Avoid intermediaries. Avoid funds. Diversify.

Most importantly, build your portfolio around investments and instruments you are comfortable with. If you feel good with annuities, go for annuities. Still, diversify.

I would be very happy with stocks of Grand Marnier, Anthon Berg and Swan. Should worse come to the worst, it is better to own a piece of something you love than a pile of cash. One can't eat cash. ;-)

Buy a boat that will sail, and SELL, well. This is not an investment but this IS a part of the money game.

Seek your own wind, follow your own style, in investments and in sailing.

Cheers,
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Old 05-10-2016, 08:51   #12
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Re: Best investment while we travel

The problem with stocks is the market is close to an all time high... the reason the stock market is so high is because of a lack of options. Bonds pay diddly and CD's worse. Stocks are very risky if the FED ever raises interest rates and takes the dollar and economy off life support. Say you buy a stock today and stocks sell off 50%.... suppose because of the week economy as a result of a crash generates less dividends or none... if you try to sell your stock you not only get less or no income but you can lose 50% of the value of your investment. That is why stocks are considered historically riskier than bonds or fixed income.
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Old 05-10-2016, 09:50   #13
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Re: Best investment while we travel

Luckily I have most of my retirement taken care of with our retirement system. Keeps me from losing all of my retirement funds. I found out years ago that I am not good at picking stocks or timing the market. I would be scared to dump $500K into anything of my choosing for fear of losing half with a market "correction" a week after the deposit. As I said, my timing is horrible. My best results have been by using dollar cost averaging to purchase investments over time, eliminating my timing issue.

I would consult a financial advisor with that much of a nest egg, not me, or any strangers around here (ducking). I have been playing around with a few of the new breed of investment companies: WealthFront, Betterment, Motif and WiseBanyan. I like the low or no fees part, and I am not talking a lot of money, just playing around. Lately I have been sticking to Motif for scratching that "I am a stock market player" itch and WiseBanyan for "You are an idiot and can't pick or time stocks, so use dollar cost averaging. Why do I have to keep telling you this?" reality check. Again, I would not dump all of my money into one of these. Scary thought! I don't mind losing and learning, but with that amount my wife would kill me.

Would love to know what you decide and how it turns out. Good luck!
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Old 05-10-2016, 10:28   #14
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Re: Best investment while we travel

I agree that you should not rely on 'free advice' on a sailing forum. However some suggestions are worth considering, so here are my two cents.

I would avoid annuities - asymmetric downside risk and the key is to be liquid.

Given the current stock market performance, which is almost exclusively function of the central banks money printing effort (aka QE/Stimulus) at this point in time the potential downside is higher than the potential upside. I would be extremely careful whether to enter the market at this point.

Rental income could be a good alternative but it needs some research. If you don't want to buy property, some REITs may be a good alternative and they are liquid. Needs a bit of reading and understanding.

Whatever you do, I would keep at least 20% in good old cash (in few different banks) and maybe buy a little bit of that shiny yellow metal. just in case.

Good luck and enjoy your trip!
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Old 05-10-2016, 10:56   #15
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Re: Best investment while we travel

Opinion, not advice:
1/ Cash will go down in value, at least most of the major currencies will (Switzerland may be an exception). But you will need some cash with you and more obtainable via debit card(s).
2/ Annuities are presently crap. They will provide a negative return, particularly when the fees are factored in properly. They are reasonably reliable if you are careful.
3/ Precious metals (e.g., gold and silver, etc.) are possible but risky to have on a boat in several ways. Maybe a few thousand in dollar value (well hidden) for an emergency? Never have your precious metals stored by a third party, particularly the seller.
4/ I am not against the top drawer stocks and ETFs, but it also depends on how big you think the drop is going to be when interest rates climb, and when it will happen.
5/ In anticipation of inflation, and your long and short term needs, and how much you have (half a mil is not at all bad, but it is huge to some, and a pittance to others) it is probably a good idea to spend a few dollars on some financial advice, not someone tying to sell investments.
6/ A mix of holdings and a hard but accessible reserve is likely the order of the day. Remember, you can change the mix, but it is unlikely to be on an immediate basis. Your will be cruising, which does not mean you are always in touch or out of touch.
7/ I am unsure if your $500,000 is before or after your boat. If it is after, and your goal is four years, you can live pretty high for $125,000 per year. If the money needs to last longer (the rest of your life or lives) your strategy could be far, far, different.

Above all. Enjoy the ride.

This is an edit: I like what Invictus69 said in post #14. Good advice.
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