Author Topic: What Should We Do With a Large, Post FI Influx of Cash?  (Read 4161 times)

Dicey

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What Should We Do With a Large, Post FI Influx of Cash?
« on: August 15, 2019, 11:28:34 AM »
I'm posting in this section on purpose. I'm seeking input from people who are already living the FIRE life.

I'm FIRE, DH is still working. We are comfortably FI and his reasons for working for another 20 months are solid, so that's not up for discussion. Here's what is:

We've just spent 15 months flipping a house, which is now in escrow. When it closes, we will get about $400k. Some of it is simply return on investment and not taxable, but about half of it will be of interest to the IRS.

I'm looking for -

1.  Suggestions on how to handle the money to minimize the taxman's haircut.
          - I'm willing to pay what is owed, but don't want to pay more than necessary. DH has a Defined Benefit Pension, and we
            have a large stache, so he typically only puts 10% into his 401k. We've done the math, and for the rest of the year he'll
            be saving 65%, which should take him to the max. We will use some of the return on investment cash to make up the
            income shortfall. (We're not crazy high income, <100k in a HCOLA.) But that's just a baby step.

2. Thoughts on what to do with this much cash on an interim basis.
         - We might use it for a future flip, if we find one that pencils out, but we never know if/when that's going to happen. It took
           us three years to find the one we just finished. In the interim, we bought two more rentals (for a total of 3), but otherwise
           we just sat on a big pile o' money. We're not sure if we want to buy any more rentals. Ours are all in the same area. Prices
           are high right now and the HOA is a pain in the ass.

We have plenty in our 'stache for retirement. About all I can come up with are high interest savings accounts. We don't really want to drop it into the stock market. We have enough there to keep us firmly FI. Our house has no mortgage. We have no other debt except on the rentals, which we do not plan to pay off.

Your thoughts and suggestions are very much appreciated. If you have questions or I've omitted anything significant, LMK. Thanks!

ETA: Something I should have pointed out is that because we owned this property for more than a year, it will not be taxed as Ordinary Income, but as Capital Gains. IIRC, it should be 15%-20%. Might not be the worst thing to suck it up and pay the taxes, but that still leaves us with a big slug of cash to figure out what to do with.
« Last Edit: August 16, 2019, 10:43:13 AM by Dicey »

former player

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Re: What To Do With a Large, Post FI Influx of Cash?
« Reply #1 on: August 15, 2019, 11:45:04 AM »
1.  Paid daily help with MIL.

2.  A round the world trip when DH retires.

3.  Your favourite most underfunded charity.

UnleashHell

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Re: What To Do With a Large, Post FI Influx of Cash?
« Reply #2 on: August 15, 2019, 11:52:51 AM »
can you set it up as a company in which you pay yourself .

I'm look at the solo 401k to protect some of the funds.

Dicey

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Re: What To Do With a Large, Post FI Influx of Cash?
« Reply #3 on: August 15, 2019, 01:40:49 PM »
can you set it up as a company in which you pay yourself .

I'm look at the solo 401k to protect some of the funds.
Not sure if this is possible this late in the game. Maybe good if we ever decide to do this again.

Dicey

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Re: What To Do With a Large, Post FI Influx of Cash?
« Reply #4 on: August 15, 2019, 01:48:39 PM »
1.  Paid daily help with MIL.
Kind of have this already. She goes to respite care four days a week. It's paid with her money, so no OOP for us. Important note: MIL has her own resources as well as LTC insurance. She's also healthy as a horse. The challenge is when to turn on the fire hose to be sure it lasts.

2.  A round the world trip when DH retires.
I like the way you think. I've already promised DH he can buy any RV he wants, so we can tour the US. International travel is more my thing than his, but some of that is sure to happen as well.

3.  Your favourite most underfunded charity.
That's more my thing than his. I plan to spend the money I inherited from my parents ($40k-ish) on charity. They would be pleased.

G-dog

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Re: What To Do With a Large, Post FI Influx of Cash?
« Reply #5 on: August 15, 2019, 02:20:48 PM »
Anyone for which you want to start or add a 529 plan?
You didnít give your ages - so not sure if you can already withdraw from any IRA / Roth / etc. without penalty.  If not you may want a Roth.
Do either of you have an HSA? There is a tax deductible limit each year (not much relative to your bolus but .....)
When you do start withdrawing, will the withdrawals be taxable?  If so, a Roth would be handy for tax-free withdrawals.
Long-termcare insurance?
Annuity?
The 2 month bond judged inverted to have a better yield than the 10 yr bond (though bonds are a tax PITA IMHO).

I agree with @UnleashHell - you should get set up as a company so you can find your own 401k as proprietors.  You can put a lot of money in.  I think as long as you can show activity related to the business you are OK (following the real estate market, going to showings, bids, etc.).
« Last Edit: August 15, 2019, 03:04:01 PM by G-dog »

FireLane

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Re: What To Do With a Large, Post FI Influx of Cash?
« Reply #6 on: August 15, 2019, 02:44:43 PM »
Do you have a donor-advised fund? This could be a good time to open one, or add to one. You can take the tax deduction now for the donated amount, while DH is still working, and use that money to fund future charitable giving.

couponvan

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Re: What To Do With a Large, Post FI Influx of Cash?
« Reply #7 on: August 15, 2019, 02:48:35 PM »
1. Dicey ticket to Chicago in October to advise on another real estate situation (tax deductible business trip).
2. Dicey and hubs ticket to Virginia to advise on ... see above.

3. River and repeat with all of the others looking for same advice.

4. Use the $198 left of interest to government for quick 1031 exchange investment in another flip-your clock is ticking and DH is local for another year. Maybe another rental?

ETA-tax codes and 5pm donít mix
« Last Edit: August 15, 2019, 04:08:20 PM by couponvan »

arebelspy

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Re: What To Do With a Large, Post FI Influx of Cash?
« Reply #8 on: August 15, 2019, 03:52:02 PM »
You could afford so many lizards.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Another Reader

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Re: What To Do With a Large, Post FI Influx of Cash?
« Reply #9 on: August 15, 2019, 04:07:14 PM »
My best guess is we will have a recession in the next year or two.  I'm unenthusiastic about putting a lot of money in paper asset markets right now and I see almost nothing anywhere in real estate worth buying.  The real estate markets anywhere worth investing in are on fire.  Can you say 2006?  That guess has a large influence on what I would do.

In your shoes, I would look for a 1031 exchange candidate.  I would NOT buy something unless I could pick up a bargain, something in an underappreciated market that could be improved and expanded over time.  Get creative, think outside the box.  Develop/expand a self-storage project in a growing area?  Pick up some industrial buildings with excess land in a smaller market and build out?  That's the sort of thing I would look for.  However, I would only buy if I could make the numbers work with lower rents and occupancy near term because we are at or near the peak of the market.  Once DH retires, start the expansion/renovation or whatever the value add is.

I would also put out feelers to see if I could find rentals with deferred maintenance in second tier locations that have not been bid up as much as the Bay Area or similar places.  Find someone that is in over their head or is older and wants to liquidate.  A location that is not hot yet, but has the potential 5 or 10 years from now.  Word of mouth works best here, because of the hordes of people out there trying to make a buck flipping or wholesaling. 

If that fails, dump what you can into tax deferred accounts and prepare to write Really Large checks to the folks in Washington and Sacramento.

Dicey

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Re: What To Do With a Large, Post FI Influx of Cash?
« Reply #10 on: August 15, 2019, 05:09:28 PM »
I don't think we can do a 1031 exchange because we bought it with a partner. The partner quit claimed off the deed, just prior to the sale, which makes it tricky. Worth thinking about. I'm all ears.

@arebelspy - no birds, no lizards.

Another Reader

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Re: What To Do With a Large, Post FI Influx of Cash?
« Reply #11 on: August 15, 2019, 05:31:25 PM »
I don't think we can do a 1031 exchange because we bought it with a partner. The partner quit claimed off the deed, just prior to the sale, which makes it tricky. Worth thinking about. I'm all ears.

@arebelspy - no birds, no lizards.

CPA time...  Your portion can probably be exchanged.  Did you buy her out or did she walk away? 

Cassie

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Re: What To Do With a Large, Post FI Influx of Cash?
« Reply #12 on: August 15, 2019, 07:54:24 PM »
I vote with the travel and blow that dough crowd:))   I never understood people that didnít realize HCOL places have high wages for many even when I lived in small town Wisconsin.  We are in Nevada now which is skyrocketing in housing costs but still cheap for California.

SwordGuy

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Re: What To Do With a Large, Post FI Influx of Cash?
« Reply #13 on: August 15, 2019, 10:29:23 PM »
We just got in about $155K, most of which is just reimbursement for expenses on a charity flip.

$55K is going to purchase a charity house.   Another $15k to $20k will go to fixing it up.

Not sure how it will be set up for charitable usage, we're still learning this stuff.   If we donate it after it's renovated we can donate it at the after-repair retail value instead of the judicial sale + expenses cost.  That will save a fair penny in taxes.

The rest?  I'm unsure.   We've had three big influxes of cash -- selling my mom's house, selling our old paid-for house, and now this one.   The original plan was to pay off our new mortgage when we sold my mom's house or our old house, whichever came first.   Then we realized that paying off a 2.75% fixed rate mortgage quickly wasn't the optimal financial move so we invested the money instead.   (Still want to pay off the mortgage anyway. :( I just do. )

Some will go to renovating the duplex before we sell it.

I think we'll just sit on the rest of it for a bit until we find a good real estate deal or stocks drop bigtime, whichever comes first.   We still have the charity house to renovate so that will keep us busy for a few months.

Dicey

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Re: What To Do With a Large, Post FI Influx of Cash?
« Reply #14 on: August 15, 2019, 10:41:57 PM »
I don't think we can do a 1031 exchange because we bought it with a partner. The partner quit claimed off the deed, just prior to the sale, which makes it tricky. Worth thinking about. I'm all ears.

@arebelspy - no birds, no lizards.

CPA time...  Your portion can probably be exchanged.  Did you buy her out or did she walk away?
Hmmm, we gave her her down payment plus 1/2 of the expenses to date plus 5% of that, not 5% of the profits. She filed a quit claim to get their names off the title. Tricky.

EscapeVelocity2020

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Re: What To Do With a Large, Post FI Influx of Cash?
« Reply #15 on: August 15, 2019, 11:47:35 PM »
Interested to see the advice (and hopefully the outcome).  You should've started this thread earlier to get the best chance to minimize (or avoid taxes with the greatest range of upside), but you probably don't want to hear this (again).

Another Reader

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Re: What To Do With a Large, Post FI Influx of Cash?
« Reply #16 on: August 16, 2019, 06:21:49 AM »
I don't think we can do a 1031 exchange because we bought it with a partner. The partner quit claimed off the deed, just prior to the sale, which makes it tricky. Worth thinking about. I'm all ears.

@arebelspy - no birds, no lizards.

CPA time...  Your portion can probably be exchanged.  Did you buy her out or did she walk away?
Hmmm, we gave her her down payment plus 1/2 of the expenses to date plus 5% of that, not 5% of the profits. She filed a quit claim to get their names off the title. Tricky.

You also generated a reappraisable event for property taxes.  If she was a 50 percent owner, half the value will be reset for the change in ownership.  You will get a supplemental tax bill for the remainder of the fiscal year.  That will have to be pro-rated in escrow.  That bill will likely be based on the sale price to the new buyer.  The buyers will get a stepped up supplemental for the remainder of the fiscal year after COE.  It would have been better to record the deeds together...

You can likely exchange the property since it was 100 percent yours as of COE.  You would have a new basis set for the half you acquired from her.  This is tricky. I would find a competent CPA experienced in this area to advise you on calculating basis.

A Fella from Stella

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Re: What To Do With a Large, Post FI Influx of Cash?
« Reply #17 on: August 16, 2019, 07:01:37 AM »
Taxes are somewhat unavoidable if you want to use it, but later taxes might not be. Would you consider a cash-intensive business for later, like a Laundromat, or one of those rip-off coin-counting machines where you give me their money less 5% or whatever?

Dicey

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Re: What To Do With a Large, Post FI Influx of Cash?
« Reply #18 on: August 16, 2019, 10:15:14 AM »
I don't think we can do a 1031 exchange because we bought it with a partner. The partner quit claimed off the deed, just prior to the sale, which makes it tricky. Worth thinking about. I'm all ears.

@arebelspy - no birds, no lizards.

CPA time...  Your portion can probably be exchanged.  Did you buy her out or did she walk away?
Hmmm, we gave her her down payment plus 1/2 of the expenses to date plus 5% of that, not 5% of the profits. She filed a quit claim to get their names off the title. Tricky.

You also generated a reappraisable event for property taxes.  If she was a 50 percent owner, half the value will be reset for the change in ownership.  You will get a supplemental tax bill for the remainder of the fiscal year.  That will have to be pro-rated in escrow.  That bill will likely be based on the sale price to the new buyer.  The buyers will get a stepped up supplemental for the remainder of the fiscal year after COE.  It would have been better to record the deeds together...

You can likely exchange the property since it was 100 percent yours as of COE.  You would have a new basis set for the half you acquired from her.  This is tricky. I would find a competent CPA experienced in this area to advise you on calculating basis.
She did it the week we put it on the market, so maybe six weeks between that event and COE to the new buyer. The taxes won't be much if that does happen.

I agree, it would have been better, but the flip side us that we're making considerably more because we're not splitting the profit with her.

Going to take your advice re: CPA. We have one, but this may require a specialist. Would be worth the money spent, methinks.

Dicey

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Re: What Should We Do With a Large, Post FI Influx of Cash?
« Reply #19 on: August 16, 2019, 10:23:01 AM »
I just changed the title of this thread. I don't think my question was clear enough.

Something I should have pointed out is that because we owned this property for more than a year, it will not be taxed as Ordinary Income, but as Capital Gains. IIRC, it should be 15%-20%. Might not be the worst thing to suck it up and pay the taxes, but that still leaves us with a big slug of cash to figure out what to do with.

G-dog

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Re: What Should We Do With a Large, Post FI Influx of Cash?
« Reply #20 on: August 16, 2019, 11:41:07 AM »
I just changed the title of this thread. I don't think my question was clear enough.

Something I should have pointed out is that because we owned this property for more than a year, it will not be taxed as Ordinary Income, but as Capital Gains. IIRC, it should be 15%-20%. Might not be the worst thing to suck it up and pay the taxes, but that still leaves us with a big slug of cash to figure out what to do with.

Well, capital gains can be offset with a capital loss (though I've never really figured out why it was worth manufacturing a loss if you didn't have one you could avoid....).

If you were a corporation - any idea how this would be taxed (i.e., are capital gains taxed?) and at what rate? 

For 15% - I wouldn't try too hard to avoid the tax consequence (but I am lazy and I think we should be paying some taxes ....)

markbike528CBX

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Re: What To Do With a Large, Post FI Influx of Cash?
« Reply #21 on: August 16, 2019, 12:19:20 PM »
You could afford so many lizards.

Hookers and blow.

If you're a Ween fan, bananas and blow.  However, the health consequences of that many bananas might be worse than the hookers.

G-dog

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Re: What To Do With a Large, Post FI Influx of Cash?
« Reply #22 on: August 16, 2019, 12:28:36 PM »
You could afford so many lizards.

Hookers and blow.

If you're a Ween fan, bananas and blow.  However, the health consequences of that many bananas might be worse than the hookers.

All this talk of bananas and hookers....

Another Reader

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Re: What Should We Do With a Large, Post FI Influx of Cash?
« Reply #23 on: August 16, 2019, 12:32:42 PM »
I just changed the title of this thread. I don't think my question was clear enough.

Something I should have pointed out is that because we owned this property for more than a year, it will not be taxed as Ordinary Income, but as Capital Gains. IIRC, it should be 15%-20%. Might not be the worst thing to suck it up and pay the taxes, but that still leaves us with a big slug of cash to figure out what to do with.

California taxes capital gains as ordinary income.  This sale will push the bracket up.  Do the detailed math on the expected gain before you make any decisions. 

Did the agent own a specific percentage?  Was she on title when you acquired the property?  Did you add her later?  All this makes a difference...

arebelspy

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Re: What Should We Do With a Large, Post FI Influx of Cash?
« Reply #24 on: August 16, 2019, 12:40:20 PM »
Dicey's comment of no birds makes me think she may have gotten my reference, or is good at Googling. :)
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Dicey

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Re: What Should We Do With a Large, Post FI Influx of Cash?
« Reply #25 on: August 16, 2019, 01:56:28 PM »
I just changed the title of this thread. I don't think my question was clear enough.

Something I should have pointed out is that because we owned this property for more than a year, it will not be taxed as Ordinary Income, but as Capital Gains. IIRC, it should be 15%-20%. Might not be the worst thing to suck it up and pay the taxes, but that still leaves us with a big slug of cash to figure out what to do with.

California taxes capital gains as ordinary income.  This sale will push the bracket up.  Do the detailed math on the expected gain before you make any decisions. 

Did the agent own a specific percentage?  Was she on title when you acquired the property?  Did you add her later?  All this makes a difference...
We bought the house as 50/50 partners. She and her husband and DH and I were all on title at the time of purchase.

Dicey

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Re: What To Do With a Large, Post FI Influx of Cash?
« Reply #26 on: August 16, 2019, 02:09:06 PM »
You could afford so many lizards.

Hookers and blow.

If you're a Ween fan, bananas and blow.  However, the health consequences of that many bananas might be worse than the hookers.
This is actually rather funny. I've told this story in my journal, so sorry for those of you who know this already. I'll throw in a few more details to freshen it up. I got banned from NextDoor with no warning for making the following comment to someone who was trash talking her city council for wanting to put a hotel on a large piece of property that currently has a large, but losing popularity, Steak House. She screeched they were only doing it to collect higher taxes. Apparently she doesn't understand she won't be paying them if she doesn't stay at the hotel, and she thinks it's okay to trash talk people, just because they had the temerity to run for office.

"Nice rant, [Person who has been banned from ND multiple times]. Do you think the council is going to spend the money on hookers and blow? Gee, maybe they're going to spend it on things the city actually needs. Perhaps you should run for office and show them how things should be done. Sheesh. Moral compass, indeed."

It was specifically the H&B reference, but when I reposted with the words "stupid stuff" instead, I still wasn't forgiven. Took three weeks to get reinstated and I had to pinky swear to "follow the Guidelines" which say nothing about pop culture references or humor. Or lizards. BTW, I have never liked bananas for one minute of my entire life.

Dicey

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Re: What Should We Do With a Large, Post FI Influx of Cash?
« Reply #27 on: August 16, 2019, 02:09:41 PM »
Dicey's comment of no birds makes me think she may have gotten my reference, or is good at Googling. :)
Or just figured that it meant something, haha.

arebelspy

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Re: What Should We Do With a Large, Post FI Influx of Cash?
« Reply #28 on: August 16, 2019, 04:01:32 PM »
Dicey's comment of no birds makes me think she may have gotten my reference, or is good at Googling. :)
Or just figured that it meant something, haha.
The bird was very good guess
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Dicey

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Re: What Should We Do With a Large, Post FI Influx of Cash?
« Reply #29 on: August 16, 2019, 07:04:42 PM »
Dicey's comment of no birds makes me think she may have gotten my reference, or is good at Googling. :)
Or just figured that it meant something, haha.
The bird was very good guess
The bird was a Portlandia reference. Remember when our partner staged the house with birds all over it? That ended up being the last straw. It's also why we're not sharing the profits as planned and we still "can't hardly" believe it.

arebelspy

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Re: What Should We Do With a Large, Post FI Influx of Cash?
« Reply #30 on: August 16, 2019, 08:42:24 PM »
Ahah, yeah. Those birds!
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Goldielocks

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Re: What Should We Do With a Large, Post FI Influx of Cash?
« Reply #31 on: August 20, 2019, 10:57:36 AM »
Dicey, your tax situation is different from where I live, but some of the overall strategies may apply.

1)  Sell any non-registered stock positions that are at a loss, and rebuy after 30 days or switch to similar but different stock / etf.  This gets a capital loss to apply against your capital gain.

2)  For the large lump sum, max out registered investments this year (done, you are on this!).   

3a)  Invest in a dividend generating ETF in a non-registered account.   Something stable or low tax.  Here, with low annual income on your tax return, the dividends are not taxed.  What does your dividend tax look like?   I am thinking that you may want to start transitioning into FIRE mode, were you are low enough taxable income each year to make a dividend strategy work for your long term income needs.

"Qualified dividends are dividends that meet the requirements to be taxed as capital gains. Under current law, qualified dividends are taxed at a 20%, 15%, or 0% rate, depending on your tax bracket."

3b)  Set up a bond ladder.  I mean, if you don'thave a business you want to invest in, and you don't need MORE money..why not set up a bond ladder with $40k coming available every year for 10 years, that you spend or renew that year as you like (buy 10 year bonds, of the interest /risk profile you prefer).    You can start it to come due the year you plan to retire, and then each year after that.    This does generate interest, however, so buy to take advantage of capital gains instead of interest rates for the same yeild, if you can.      It is like creating your own annuity, in a way.  One that you can sell at any time (for potential loss), but also one that might run out if you don't continually reinvest the overflow into another 10 year bond. 
Anyway, this could pay for your annual splurges (Car, vacation, assisted living) over the next 25 years without much management.

Obviously talk to a CPA for your specific tax situation, but these are the ideas that can work for many, that most people overlook because bonds and dividends are not "Sexy" right now, and they are higher income.  Most people with investment questions are higher income, actually, so there is little commonly known information for those of us planning to invest and live on less..

I would also hire more help for around your home with your MIL, even if she goes to senior day camp.  Maybe even fly in relatives to take care of her while you vacation or something.

calimom

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Re: What Should We Do With a Large, Post FI Influx of Cash?
« Reply #32 on: August 23, 2019, 10:14:01 AM »
Dicey's comment of no birds makes me think she may have gotten my reference, or is good at Googling. :)
Or just figured that it meant something, haha.
The bird was very good guess
The bird was a Portlandia reference. Remember when our partner staged the house with birds all over it? That ended up being the last straw. It's also why we're not sharing the profits as planned and we still "can't hardly" believe it.

"Put a bird on it!" is the actual Portlandia quote.

And as for all that cash, having a big buffer in CDs or MM doesn't seem the worst thing right now. You two don't seem to be the spend-it-immediately-and-foolishly types. :)

GreenEggs

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Re: What Should We Do With a Large, Post FI Influx of Cash?
« Reply #33 on: August 25, 2019, 10:02:16 PM »
Opportunity Zones might be worth looking into.  You have 180 days to reinvest the capital gains in them.  You can invest in the opportunity zones yourself, or invest in funds that invest in opportunity zones. 

Most of the funds seem to invest in affordable housing, but any type of business investing within the designated opportunity zones is allowed. 

I've examined the OZ map for my state.  In the larger cities the zones are on the distressed parts of town.  Some smaller towns are entirely designated as zones.  Some entire counties are designated zones. 

Here's a map that I found on an OZ fund site.  Just zoom in to the areas that you're interested in.
https://opportunitydb.com/tools/map/






Linea_Norway

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Re: What Should We Do With a Large, Post FI Influx of Cash?
« Reply #34 on: August 26, 2019, 06:31:37 AM »
We might one day be in a similar situation and inherit a big sum of money. In our case, I could imagine buying a slightly nicer home than our FIRE budget can buy and probably also a nice RV. And I think I would store the rest in the highest interest accounts I could find, or maybe some bonds. I wouldn't pile a big lump sum in the stock market right now (as the top could be in). But you could always invest it when the market does go down. But as you don't need the money really, and don't need it to grow much, I wouldn't bet too much on the stock market, just choose something safe that keeps up with inflation.

The RV sounds like a really good plan, if RV-ing is your thing. Just keep in mind what some people on this site say about RVs: the either leak, or just leaked and will soon start leaking again. Make sure you get a good quality one, or a second hand for a fraction of the new price.

And +1 for charity with money you really don't need.

bwall

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Re: What Should We Do With a Large, Post FI Influx of Cash?
« Reply #35 on: August 26, 2019, 12:43:07 PM »
Have you ever considered setting up a trust for the grandkids? Or the great-grandkids? One that they can't touch it until age 30-35 (or so) and then it only throws off 4%, so that it runs into perpetuity (or so).

The lump sum could be invested in VTSAX for the next decades until it's time to be accessed. With a starting lump sum of $300k (or so) after taxes and a 4% return (inflation adjusted) it would double to $600k (inflation adjusted) in 18 years.

At 4% of $600k, you're looking at $24k/year, split a number of ways. It's not enough (hopefully) to make the next generations indolent and lazy (also kicking in too late in life for that), yet at the same time (hopefully) enough to give them a base for a middle class life.

Dicey

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Re: What Should We Do With a Large, Post FI Influx of Cash?
« Reply #36 on: September 16, 2019, 10:22:18 PM »
Have you ever considered setting up a trust for the grandkids? Or the great-grandkids? One that they can't touch it until age 30-35 (or so) and then it only throws off 4%, so that it runs into perpetuity (or so).

The lump sum could be invested in VTSAX for the next decades until it's time to be accessed. With a starting lump sum of $300k (or so) after taxes and a 4% return (inflation adjusted) it would double to $600k (inflation adjusted) in 18 years.

At 4% of $600k, you're looking at $24k/year, split a number of ways. It's not enough (hopefully) to make the next generations indolent and lazy (also kicking in too late in life for that), yet at the same time (hopefully) enough to give them a base for a middle class life.
We have thought of it. We decided to start a 529 when our first, and possibly only, grandchild was born. I'm happy to pay for a chunk of a kid's college, I'm reluctant to underwrite their whole life for them. I understand that through the magic of compound interest, it wouldn't take a lot of cash to set up, but DH and I both know and love the feeling of achieving what we have in life through our own effort. Neither of us has even a bachelor's degree and we managed to figure it out.

One of my favorite songs is Paul Simon's "Born at the Right Time". The chorus is:
"Never been lonely
 Never been lied to
 Never had to scuffle in fear
 Nothing denied to
 Born at the instant
 The church bells chime
 And the whole whispering
 Born at the right time."

I get it that a lot of things were granted to me just because of where and when I was born. I also know the power of working hard and willing something into existence. I want my grandchild to have that knowledge and the strength and confidence it brings.

----------

Today, I put 50k into a 9 month CD with a 2% APR at our regular bank. Our bank has a huge minimum, IMO, so this will keep us out of fee territory for a good chunk of time while we figure out what to do next. We both hate bank fees with a passion. Since DH wasn't with me, I had to open the CD in my own name with funds from our joint account. Here's the kicker! The bank claimed there was some kind of discrepancy with my personal information and I had to fill our and docusign a form swearing that all my information was correct. To move money from one account to another at the same damn bank! Then they started asking me all kinds of questions about the source of my income, my investments and my other assets. I looked the banker straight in the face and said "Do I have to answer these questions?" Turns out I didn't. Fuck you, big bank.

Linea_Norway

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Re: What Should We Do With a Large, Post FI Influx of Cash?
« Reply #37 on: September 16, 2019, 10:29:31 PM »
I think those questions about the origin of the money are some new directive against black income. I created 2 diffirent savings accounts a few days ago and had to answer a similar list of questions. I opened the account in a bank where I already had a credit card, but I still got these questions.

And maybe the bank is careful because you move money from an account owned by both of you, to your personal account. If you would leave your hubby the next day, you could have taken along half of his money.

Dicey

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Re: What Should We Do With a Large, Post FI Influx of Cash?
« Reply #38 on: September 17, 2019, 10:03:08 AM »
I think those questions about the origin of the money are some new directive against black income. I created 2 diffirent savings accounts a few days ago and had to answer a similar list of questions. I opened the account in a bank where I already had a credit card, but I still got these questions.

And maybe the bank is careful because you move money from an account owned by both of you, to your personal account. If you would leave your hubby the next day, you could have taken along half of his money.
1. The money was already in their bank.
2. CA is a community property state. Either of us could clean out the account at any time.
3. I was not withdrawing any money from the bank.

SunnyDays

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Re: What Should We Do With a Large, Post FI Influx of Cash?
« Reply #39 on: September 17, 2019, 12:18:05 PM »


We decided to start a 529 when our first, and possibly only, grandchild was born. I'm happy to pay for a chunk of a kid's college, I'm reluctant to underwrite their whole life for them. I understand that through the magic of compound interest, it wouldn't take a lot of cash to set up, but DH and I both know and love the feeling of achieving what we have in life through our own effort. Neither of us has even a bachelor's degree and we managed to figure it out. 
I get it that a lot of things were granted to me just because of where and when I was born. I also know the power of working hard and willing something into existence. I want my grandchild to have that knowledge and the strength and confidence it brings.

[/quote]

Yup.  Warren Buffet himself pays for any and all education his grandchildren want, but nothing else.  He told them this upfront at an appropriate age and apparently, they were okay with it.