Author Topic: Another 300K question today  (Read 909 times)

ameyer410

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Another 300K question today
« on: February 15, 2023, 12:41:37 PM »
Hi all. I am about to sell my business and after the broker's fees, I'm expecting to receive around ~300K from it (pre-tax). I am 36, have zero debt, and max out both my and my husband's retirement accounts each year. We don't expect any major life changes or big purchases soon.

I'll start working again or build another business in a few months, but I'm good at living a frugal life so it's enticing to figure out how to best make this money work for me long-term and take withdrawals from it.

Outside of putting the taxes I'll pay into a high-interest savings account for the next year, I am considering investing the rest of the ~250K lump sum into an S&P or Total Stock fund, taking anywhere from 1K-2K a month out of it as needed over the next decade or longer. I'll be working again sooner than later, so I don't have to necessarily withdraw from this fund when the market dips. Otherwise, I know there have to be some errors in my thinking here and I feel like I'm missing something (DCA, other wiser choices, etc.). I'm pretty good with the financial stuff, but not as good as others on this forum. I appreciate any help or insight!

Financial.Velociraptor

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Re: Another 300K question today
« Reply #1 on: February 15, 2023, 01:21:55 PM »
Your plan to take out a couple thousand a month for "a decade or so" probably works.  If you don't want to deplete that, safe withdrawal rate of 4% is 10,000/yr or 833.33/mo.

PDI pays over 12% right now (but are sort of pricey for what they hold).  That is a 'no growth' bond portfolio but will provide decades of solid income for a very long time.  There is some price upside when/if the Fed ever starts cutting rates again.

What you really need is a case study.  Board can't give you reliable advice without knowing your full picture, including other assets, expenses, insurance, risk tolerance, and more.  https://forum.mrmoneymustache.com/case-studies/

« Last Edit: February 15, 2023, 01:38:21 PM by Financial.Velociraptor »

ameyer410

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Re: Another 300K question today
« Reply #2 on: February 15, 2023, 02:32:37 PM »
Thank you Financial.Velociraptor (I'm a hard core Jurassic Park fan over here).

I think my biggest thing right now is figuring out if investing that lump in one index fund is an okay move or if it's idiotic (for some reason that I can't see).

Financial.Velociraptor

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Re: Another 300K question today
« Reply #3 on: February 15, 2023, 06:23:43 PM »
Thank you Financial.Velociraptor (I'm a hard core Jurassic Park fan over here).

I think my biggest thing right now is figuring out if investing that lump in one index fund is an okay move or if it's idiotic (for some reason that I can't see).

Putting a lump sum into an index fund you don't intend to touch for 20 years is ALWAYS a reasonable approach and NEVER "idiotic".  But if you want advice that is tailored to your precise situation, you NEED a case study.


Financial.Velociraptor

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Re: Another 300K question today
« Reply #4 on: February 15, 2023, 06:28:30 PM »
Also, understand your reticence.  A quarter Million after taxes is for someone at most ages a "life changing" amount of cash.  You don't want to 'dork that up'.   Honestly, for 99% of Americans and even Europeans (index and forget) is going to be fine; you can certainly do worse.  But if want specific advise to optimize that money to your particular needs, including asset allocation, you have to provide more detail in a case study.

MustacheAndaHalf

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Re: Another 300K question today
« Reply #5 on: February 17, 2023, 10:01:29 PM »
Hi all. I am about to sell my business and after the broker's fees, I'm expecting to receive around ~300K from it (pre-tax). I am 36, have zero debt, and max out both my and my husband's retirement accounts each year. We don't expect any major life changes or big purchases soon.

I'll start working again or build another business in a few months, but I'm good at living a frugal life so it's enticing to figure out how to best make this money work for me long-term and take withdrawals from it.
Have you already signed the contract to sell your business?

I'm wondering if an accountant would agree with the sales price, based on experience with very small businesses similar to yours.  They might provide insight into price/sales, and determine how fair the price was that you were offered.  If you're already under contract, you'll still sell, but have a more accurate understanding for next time.

Dicey

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Re: Another 300K question today
« Reply #6 on: February 17, 2023, 11:34:55 PM »
Why are you selling your business if you still need income?

Also, do what @Financial.Velociraptor says or risk being eaten.

RWD

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Re: Another 300K question today
« Reply #7 on: February 18, 2023, 12:02:19 PM »
Lump sum investing is a perfectly fine strategy and usually is the superior option.
https://jlcollinsnh.com/2014/11/12/stocks-part-xxvii-why-i-dont-like-dollar-cost-averaging/