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How do I conservatively invest a large sum of money?

I need advice on how to invest $3 million in a conservative market, limiting any risk. Can I make a 5% return without risk to my principal? I already have a fair amount of money in annuities, therefore I don't want to invest in them any further.

Financial Planning, Investing, Annuities
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September 2016

This is the age old question isn't it? How do I get a return without taking any risk? Most of us just don't like the honest answer. . .you can't. However, let's talk about what you can do. Here are a few ideas and the risk associated with each.

1) 12 different savings accounts. You will earn next to nothing but will have the FDIC on all the money. (Most people wouldn't do this, and I am guessing neither would you, but it is the only way to not have risk to principal).

2) CD's. You could purchase a series of CD's with different maturities. You will not get the 5% you are looking for, but there is limited risk. The downside is they are not liquid.

3) Fixed Annuity (not fixed index annuities or variable annuities) - I know you have annuities, however there are a few short term fixed annuities out there that offer a higher rate than CD's. Search some highly rated insurance companies to see what they offer.

4) Municipal bond portfolio. Talk with a qualified advisor who can design a laddered municipal bond portfolio for you.  The amount of money you are looking to invest will allow you to purchase individual bonds as opposed to bond funds. If interest rates rise and the value of the bonds decreases, you can simply hold them to maturity and get a return of the principal. This strategy is more complicated and there are several risks involved, however an experienced financial advisor who understands municipal bonds should be able to help you with the details.

Lastly, I think you need to be prepared to adjust your expectation for getting a 5% return without taking much risk. That is a very difficult task in the current interest rate environment.

I hope this helps some. Happy investing!

September 2016
September 2016
September 2016
September 2016