How should I invest the $200,000 I received from the sale of my house?

I am a 63-year-old single woman with no children, and I plan to retire at age 65 and go back to Peru. I sold my house and I received $230,000 and I want to invest 200,000, but I will need $100,000 in one or two years. How should I invest this money?

Financial Planning, Retirement, Investing, Real Estate, Women & Money
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August 2018

First, you need to have a reasonable estimate of your monthly expenses in Peru.   Second you need to subtract your fixed income sources, and lastly figure out how to receive a reasonable income stream from the money you invest.

So, for example, if your monthly expenses in Peru will be $2000*, and your income (presumably from Social Security) is $1200/ month, then you will need $800/ month from your $130,000 portfolio (if you need $100k in one or two years, that money should remain in a CD or money market).

If you need $800/ month from your $130,000 investment portfolio, that represents a 7.4% distribution rate.   If your portfolio is invested in mostly bonds and some stocks, you might return 5%/ year.  Assuming a 5% growth rate, you would then run out of money after 22 years.   If you don't have any beneficiaries, and expect to be 'too old to enjoy your money' by the time you turn 87, that might be completely acceptable to you.   Of course I simply gave you an example with broad assumptions (and not factoring inflation).

You can use the calculator attached to this link to help you hone in on the right answer.  

https://www.minkwealth.com/distrsavings-calculator/

To answer your question about investing more directly, I would urge you to look at a balanced mutual fund from Vanguard or Fidelity.  The costs are low, and unlike a stock or ETF (Exchange Traded Fund), you can set up a systematic distribution plan without incurring transaction costs (in this example $800/ month that would be direct deposited into your bank account).  

*I did a quick google search for cost of living, and on average, if your expenses in the United States were $5000/ month, then you can expect the same lifestyle will cost about $2000/ month in Peru.

Good Luck and remember the famous Peruvian Proverb:  Fortune and Olives are alike: sometimes a man has an abundance and other times not any. 

August 2018
August 2018
August 2018
August 2018