how to invest 1mUSD

[Roger]

Hi everyone,

I will be in the rather unusual situation that I will get roughly 800k (after tax) some time during the second half of this year. I'm trying to sell my apartment, which will free the equity I have in it. I will move to a different country, which gives me the opportunity to get my tax-deferred savings (pension fund and similar) at a massively reduced tax rate. After all this, I should end up with around 800k cash in my account.

I'm 41 years old, single, no kids. I will retire (and travel or sail around the world or whatever) in the next (very few) years or at least have the financial freedom to do so.

Is anyone in a similar situation or a couple years ahead of this and can share investment advice?
I have very good knowledge in investing and have been investing in shares and funds for many years.
Topics I would like to get other opinions are:
- which bank would you recommend? I fall somewhere between retail and private banking; affluent investor. Which bank is good for that?
- Investment classes: A broad portfolio of individual stocks? ETFs? Mutual funds? Something else? A mixture of these?

What are your thoughts?

Thank you in advance!
kind regards,
Roger

[capitalninja]

Before you do anything with that money, it would be wise to educate yourself on the various investment vehicles along with their associated advantages/disadvantages. Do you have a means of income other than this 800k?  Do you have any other money than the 800k? The answer those two questions will weigh heavily into how you allocate the money.

I'm not sure what you're asking in regards to your question about banking. Don't take investment advice from a banker. They have a vested interest in being profitable (not that there's anything wrong with that) which *will* create conflicts when it comes to their investment recommendations.

If you're not willing to self-educate and learn to mange the money yourself, another option would be go find a financial planner that's truly a fiduciary and work with them to allocate the capital. IFA (Index Fund Advisors - https://www.ifa.com) is well respected in the industry. They can manage your money for you by putting it into low-cost index funds as well as automatically rebalance the portfolio as they see fit. Granted they're going to charge you a fee for doing this (anywhere from .25 - 1% of AUM annually).

Finally, it's important to realize that while 800k sounds like a lot of money, it will only produce somewhere between 22 - 26k per year in dividend income. So be sure to evaluate your cost of living before embarking on your trip to sail around the world. The only thing worse than not retiring early, is having to return to work after having retired because you didn't accurately calculate your living expenses.

Were it me and I was looking for very simple and inexpensive asset allocation that I could set and not look at for the next 20 or so years, I'd put 50% of the money into VTI, 35% into VEA and 15% into VWO. That covers the entire US stock market as well as both the developed and emerging international markets.  Short of the world coming to an end, that's an asset allocation that will do well over time because you own practically everything worth owning. That lazy asset allocation would work for me based on my tolerance for market volatility.

The best thing for you to do would be to spend the next few months getting educated on investing while you wait for this money to come in later this year.

Hope this helps.

[Vagabond76]

I will give you the same answer as any financial profession: send it to me and I will invest it for a _small fee.

Why does OP claim to have "good knowledge in investing" learned over "many years" and yet still asks a very basic question?  A troll post gets a troll response.

[Roger]

Thanks for the qualified response and the less qualified one. So far, I have invested money in individual stocks and/or mutual funds and tried different strategies. Results have varied widely. I never needed to live off my investments.
That's why I'm interested in profiting from the experiences from others. It seems, most people in this forum prefer Vanguard ETFs over stock picking and I wonder under what circumstances stock picking is actually better than ETFs.

[zz_marcello]

.... I wonder under what circumstances stock picking is actually better than ETFs.

Stock Picking is better than Index ETF's if you belong to the approximately 10% of Hedge Fund Managers, which is maybe 0.01% of the population that can outperform the general stock market in the long term.

If you have a history of outperforming the general market, then continue what you are doing.
If you dont have such a history, then you have to ask yourself why you could do better now.
:-)
 
With that said I do a mixture of trading and investing. Learning to get wealthy with Index Investing will take you maybe 100 hours and a high saving rate.
Getting rich as a trader will take you 10.000 hours or more and most of the traders/stock pickers will never make it; because you need a certain kind of personality.

Put your money in low fee index funds from Vanguard. Live from the dividends and call it a day.