Best ROI for Retiree with $200k cash

[ModernAlpha]

A friend of mine is recently retired.

Earns $2k/month from social security already.

Recently came into a bit of money. Paid off house and all debts. Has about $200k cash leftover.

Edit: This person also wishes to "set it and forget it", they are retired, they don't want to start trading stocks or any other option that requires work.

What are some options to preserve this capital and yield maximum cash flow?

Thanks Fastlaners!!

 

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[jon.a]

find the options threads

 

[IceCreamKid]

Depends on how active of an investor he wants to be.

If he wants to be active and gain higher returns that are mathematically guaranteed then find the option threads as the gentleman above me said.

If he wants to be passive while still achieving higher than average returns then buy some single family homes in areas where tourists like to go and rent it out as an Air BnB. Higher rental income, higher quality tenants, and less risk in terms of wear and tear on the home.

 

[Deleted35442]

I recommend http://www.motifinvesting.com for people with that kind of cash and prefer to remain lazy about markets. Cheap and has the same functionality as an ETF essentially. I wrote a whole thread on Investing here.

 

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[juan917]

real estate & hire a management firm. done.

 

[bringitnow28329]

I hope this person is like 90 years old because if all they have is $200k and they are around age 65, they are in trouble. They should not be taking any risks. You need like $2 million+ when you have 20+ years to live.

 

[ModernAlpha]

I hope this person is like 90 years old because if all they have is $200k and they are around age 65, they are in trouble. They should not be taking any risks. You need like $2 million+ when you have 20+ years to live.

This person is mid 60s and already receives $2,000+/month from social security. They are left with $200k cash in the bank after paying off all credit card debts. I believe their home only has a very small equity line taken out, etc.

 

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[ModernAlpha]

This person is mid 60s and already receives $2,000+/month from social security. They are left with $200k cash in the bank after paying off all credit card debts. I believe their home only has a very small equity line taken out, etc.

BTW, I'd take a guess and say less than .5% of the population will retire with 2 million+. What do the other 99.5% do? They get by

 

[H. Palmer]

A friend of mine is recently retired.

Earns $2k/month from social security already.

Recently came into a bit of money. Paid off house and all debts. Has about $200k cash leftover.

Edit: This person also wishes to "set it and forget it", they are retired, they don't want to start trading stocks or any other option that requires work.

What are some options to preserve this capital and yield maximum cash flow?

Thanks Fastlaners!!

If your friend is not prepared to actively work with his capital and if he's not prepared to study, he doesn't have any options.
Other than let it stay in the bank and draw 1 percent or less.
This is what I would recommend.

On the other hand if he's retired long enough and gets bored, he might change his mind about doing work.
Then he has to understand a few things about investing.

First is: passive income does not exist. That's just the name given to a type of taxes in the US Internal Revenue Code and it applies to property.
This doesn't mean property investment is passive income.

In general, every investment that you don't have much experience with requires a lot of work and delivers low to zero ROI. That goes for every asset category, whether stocks, options, real estate, websites, etcetera. (I have experience with all 4 and am adding tax lien certificates this year).

High ROI and a certain degree of passivity only comes when experience is built up, mostly through years of trying and some failures, but this process can be accelerated by networking and using successful mentors.

If he decided to start investing he should never put all his money in one asset category, let alone one asset. Just let him stay 80 percent in savings and play a little with the rest and build experience with an investment type of choice.

Also, he should never give his money to an "expert" that promises guaranteed high returns with no hassle. At least not until he has built up considerable experience with that specific asset class and is capable of assessing the claims made.

Finally, if he really doesn't know what to do with his 200,000,-, he can just send it to me. I will take care of it for him with pleasure.

 

[bringitnow28329]

$2k a month is basically poverty. With only $200k in savings at age 60, getting by means they can't accept any risk which means they won't receive more than the risk free rate (10 year US gov bonds) which is about 1.8% currently. On $200k thats only about $300 a month. The biggest way to increase income would have have been waiting until age 70.5 to start taking social security which would have been an automatic 8% increase in SS payments but too late for that. If If I were this person I would seriously consider going to live in a place such as Chang Mai in Thailand where you can live comfortably on $500 a month and have access to high quality health care at a cheap rate.

A friend of mine is recently retired.

Earns $2k/month from social security already.

Recently came into a bit of money. Paid off house and all debts. Has about $200k cash leftover.

Edit: This person also wishes to "set it and forget it", they are retired, they don't want to start trading stocks or any other option that requires work.

What are some options to preserve this capital and yield maximum cash flow?

Thanks Fastlaners!!

 

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[365]

That's a tough one. If you're not willing to put in any work you are left with few options. If you are looking for hands-off low-risk income I would probably go for something like the DoubleLine Total Return Fund. His worst enemy is inflation - cost of food, healthcare, repairs. You would typically try to somewhat offset that risk with investments like rental properties or stocks that can increase their cash flows over time.

If the $200,000 is his entire nest egg and if he doesn't have any sources of passive income other than social security I would highly recommend learning more about investing. It doesn't seem like a comfortable position for retirement and if you are uneducated you can easily fall victim to all sorts of financial scammers.

 

[redsfaithful]

We're in a very low yield environment, it's a rough time to be a retiree.

I would have him read this and follow the instructions, it's a conservative and low management plan and philosophy: https://www.bogleheads.org/wiki/Bogleheads®_investment_philosophy

 

[Roli]

A friend of mine is recently retired.

This person also wishes to "set it and forget it", they are retired, they don't want to start trading stocks or any other option that requires work.

What are some options to preserve this capital and yield maximum cash flow?

Thanks Fastlaners!!

If you could answer the above question, you would probably be the richest person on the planet...

Put it in a high interest European savings account, you'll get about 4%, but there is no such thing as set it and forget it, unless you pay someone else to do the work for you, then you can set and forget.

What do you do? Maybe he could pay you

 

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[MJ DeMarco]

$2k a month is basically poverty.

From a conventional American standpoint yes, however, $2K a month is plenty when A) You own your house free and clear and B) You have no debt, no car payments, no nothing. You can live quite comfortably on $2K from that launch point.

 

[100k]

Real Estate Investment Trust...

 

[jon.a]

I re-read the OP and noticed the no work thing. But, I'd recommend selling covered calls. Some work, but not a bunch.

 

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[AllenCrawley]

A friend of mine is recently retired.

Earns $2k/month from social security already.

Recently came into a bit of money. Paid off house and all debts. Has about $200k cash leftover.

Edit: This person also wishes to "set it and forget it", they are retired, they don't want to start trading stocks or any other option that requires work.

What are some options to preserve this capital and yield maximum cash flow?

Thanks Fastlaners!!

Posts like this make me a little nervous. I'm sure you and your friend are intelligent and sharp people but please beware that there are anonymous people that frequent this forum looking for posts just like this. Some may actually reach out to you to pitch you on their "investment opportunity" (even though this is for a friend you may get pitched with a referral fee opportunity). You may have already received some PM's.

This goes out to everyone here. Just be mindful and aware.

 

[FreshStart87]

From a conventional American standpoint yes, however, $2K a month is plenty when A) You own your house free and clear and B) You have no debt, no car payments, no nothing. You can live quite comfortably on $2K from that launch point.

@MJ DeMarco
I like this reply and also learned a small lesson on being comfortable with a slowlane lifestyle.

 

[TG_Hawk]

A friend of mine is recently retired.

Earns $2k/month from social security already.

Recently came into a bit of money. Paid off house and all debts. Has about $200k cash leftover.

Edit: This person also wishes to "set it and forget it", they are retired, they don't want to start trading stocks or any other option that requires work.

What are some options to preserve this capital and yield maximum cash flow?

Thanks Fastlaners!!

REIT's are a decent option for a modest 4-6% return.

I would recommend becoming a private lender. One option is to find a local investor (preferably Real Estate) who uses OPM to either flip houses or buy commercial proerty that cashflows. Make sure you see where they're putting your money with bi-weekly or monthly updates. I borrow money from family & friends at 10-12% to flip houses and buildings. We turn their money over from project to project so the moey doesn't sit on the sideline not collecting interest. It prevents us from have in to go the Hard Money route and paying points, fees, etc. also make sure you're property collateralized with a Promissory Note and Deed of Trust.

A better option in your scenario is to look into larger firms like Strategic Holdings who buy Commercial Property and basically run a fund where you will will be buying membership interests (yes, they have a securities license). They buy high yield real estate with a long term buy and hold strategy. Your money will be locked up at length as they don't sell many of their assets. They run a very tight ship and have millions in reserves if anything were to go south.

 

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[ZeroTo100]

Depends on how active of an investor he wants to be.

If he wants to be active and gain higher returns that are mathematically guaranteed then find the option threads as the gentleman above me said.

If he wants to be passive while still achieving higher than average returns then buy some single family homes in areas where tourists like to go and rent it out as an Air BnB. Higher rental income, higher quality tenants, and less risk in terms of wear and tear on the home.

What areas come to mind? I don't know of any vacation destinations where the real estate properties are that cheap. I've recently looked in Orlando and found a place but know way near that cheap.

 

[Ubermensch]

A friend of mine is recently retired.

Earns $2k/month from social security already.

Recently came into a bit of money. Paid off house and all debts. Has about $200k cash leftover.

Edit: This person also wishes to "set it and forget it", they are retired, they don't want to start trading stocks or any other option that requires work.

What are some options to preserve this capital and yield maximum cash flow?

Thanks Fastlaners!!

Investing your money in a company with strong sales, scaleable sales - and with sales in a unique niche market (preferably billions large) - is a much better way to achieve the goal.

However, that achievement means getting up, moving and taking action - not just sucking on the government's teet.

 

[jon.a]

not just sucking on the government's teet.

Whoa!
Back the Mother F*cking Truck Up!
He paid for that Social Security.

 

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[Roli]

A friend of mine is recently retired.

Earns $2k/month from social security already.

Recently came into a bit of money. Paid off house and all debts. Has about $200k cash leftover.

Edit: This person also wishes to "set it and forget it", they are retired, they don't want to start trading stocks or any other option that requires work.

What are some options to preserve this capital and yield maximum cash flow?

Thanks Fastlaners!!

Hi, I hope you're still watching this thread... for some reason your post just popped into my head the other, just as the answer simultaneously manifested itself in my little noggin.

So I was thinking, that the whole point of getting to the place where your friend finds himself, is to enjoy your freedom right?

He has $200k, no bills and a small income, so here's what I would do in the same situation.

1. Get the house up to the standard whereby you can rent it out on air B&B, I don't know where your friend lives and what kind of neighbourhood it's like, but you can command some good bucks on air B&B.

2. Buy one way ticket to Thailand (my destination of choice, but hey the wold is his oyster)

3. Travel around have fun, meet people, spot opportunity, maybe the opportunity is a bar, maybe it's an ex-pat website, offering a particular service, who knows?

The point is, he can live like a king in some idyllic paradise, just from the air B&B money, I assume the social security will stop if he leaves the country? If not, all the better!

The worst thing that could happen is he gets homesick after a few months and decides it's not for him and comes back and takes up exactly where he left off.

Or he broadens his horizons, travels all over the place and finds an opportunity to increase his income at some point in the future, but it won't matter if he's living in a country where he's getting more bang for his buck.

So yeah, go, enjoy, meet, learn, love, live!!!

 

[ModernAlpha]

Hi, I hope you're still watching this thread... for some reason your post just popped into my head the other, just as the answer simultaneously manifested itself in my little noggin.

So I was thinking, that the whole point of getting to the place where your friend finds himself, is to enjoy your freedom right?

He has $200k, no bills and a small income, so here's what I would do in the same situation.

1. Get the house up to the standard whereby you can rent it out on air B&B, I don't know where your friend lives and what kind of neighbourhood it's like, but you can command some good bucks on air B&B.

2. Buy one way ticket to Thailand (my destination of choice, but hey the wold is his oyster)

3. Travel around have fun, meet people, spot opportunity, maybe the opportunity is a bar, maybe it's an ex-pat website, offering a particular service, who knows?

The point is, he can live like a king in some idyllic paradise, just from the air B&B money, I assume the social security will stop if he leaves the country? If not, all the better!

The worst thing that could happen is he gets homesick after a few months and decides it's not for him and comes back and takes up exactly where he left off.

Or he broadens his horizons, travels all over the place and finds an opportunity to increase his income at some point in the future, but it won't matter if he's living in a country where he's getting more bang for his buck.

So yeah, go, enjoy, meet, learn, love, live!!!

Thanks for the thoughts! I'm discussing a plan with them to lease apartments and rent out on airbnb actually. In certain countries a year lease and furnishing the apartment can be done quite cheap which leaves alot of room for airbnb profits. Also since it's only a lease and not locked into a mortgage I feel it's an intelligent risk.. worse case scenario seems to be you won't make as much profit as you thought.. breaking even seems pretty impossible, some real type of tragedy would have to occur.

 

[OldFaithful]

Best ROI??? Spend $20 on TMF book. If you must spend $200k, buy 10k copies and give them to friends, relatives, neighbors, strangers and rock their world.

 

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[MJ DeMarco]

Best ROI??? Spend $20 on TMF book. If you must spend $200k, buy 10k copies and give them to friends, relatives, neighbors, strangers and rock their world.

Or spend $50 and review the thread on the inside about "printing money" where I demonstrate how to make up to 10% monthly on your risk capital. Man, that sounds too good to be true, but I've been doing it.

 

[jon.a]

Or spend $50 and review the thread on the inside about "printing money" where I demonstrate how to make up to 10% monthly on your risk capital. Man, that sounds too good to be true, but I've been doing it.

That's what I was alluding to. If Mrs. jon and I choose to, I could take $200-300K and replace the entire family trust crappy real estate income by the end of the year.

 

[Soulrize]

In my honest opinion there are 2 options , He should settle on a annuity to pay it out to him over time or giving his money to a individual who can best put his money to use wither it be a business loan with interest to someone trust worthy or ownership in a business of some kind. Option B would be alot smarter if its in his capabilities

 

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