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How can my husband and I safely invest money made from the sale of our property to help us in retirement while we live in Mexico and travel?

My husband and I are retired and moving to Mexico where we will live on Social Security. After selling our property, we will have approximately $500,000 in cash. We have no debt. How can we safely put this money to work for us while we are retired in Mexico? We are 72 and 62 years old and hope to use earnings from investing for travel and prefer not to use the principal.

Debt, Retirement, Social Security, Investing
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3 weeks ago

Congrats on your retirement! Having traveled significantly myself, including some in Mexico, I think you can probably live very confortably on Social Security there. However, keep in mind a few practical suggestions in addition to the investment pointers that Mark mentioned:

  • Currency -- your income and investments will be in dollars while you're spending in pesos. Therefore, I suggest your long-term plan incorporate enough flexibility to prevent a surge in the peso from hurting your lifestyle. Therefore, I recommend building in a buffer each year between spending and income that protects again that.
  • Income from Investments -- be careful about any investment portfolio whose primary goal is income. Investments should be selected on the basis of their projected total return vs risk profile, and not simply to maximize income. Many poor investments pay high dividend and interest rates, but in a recession may still result in a permanent loss of capital. A good financial planner can help you determine a safe withdrawal rate that is independent of the investment selection.
  • Taxes -- remember that you'll still need to file a US tax return each year, so start looking for an accountant that understands expat tax rules. Some even help you file the FBAR report if you end up needing to hold assets in a foreign bank.
  • Banking -- you'll also want to setup a relationship with a international bank that caters to frequent travellers. The right international bank can offer competitive exchange rates, international phone numbers for customer service, and some even rebate all ATM fees anywhere in the world!
  • Investments -- in addition to Mark's suggestions, I would just add that you'll probably want to work with an advisor that understands investing for expats. Blue sky rules can make owning some traditional mutual funds difficult, but a well-versed advisor can help you navigate those waters and build the right portfolio for the long-term.
February 2019
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