Dear Dr. Don,
At 78 years of age, I just sold some commercial property and will receive an estimated $900,000. Where do you suggest investing to get a return of at least 5 percent per month?
— Gina Greatrate
Five percent a month is about 80 percent annually, assuming monthly compounding. Investments with that type of expected return aren’t readily available to investors.
Five percent of $900,000 is $45,000. Twelve times that number is $540,000. A $900,000 investment isn’t going to throw off $540,000 a year in returns. You need to dial down your expectations as to what this money can do for you.
I suggest working with a financial planning professional to invest this wealth. The planner will look at your overall financial picture and financial goals and develop a plan to help you accomplish those goals.
The Bankrate feature “Financial planners: Not just for millionaires anymore” will help you get comfortable with that decision, as will the CFP Board of Standards Web page “How to Choose a Planner.”
Using a fee-only financial planner and retaining him or her on an hourly basis can limit the costs of developing and implementing a comprehensive financial plan. If you can’t get comfortable with a planner’s recommendations, get a second opinion.
Want to see the big (financial) picture? Get Bankrate’s major financial stories of the week delivered to your inbox every Friday.
Ask the adviser
To ask a question of Dr. Don, go to the “Ask the Experts” page, and select one of these topics: “Financing a home,” “Saving & Investing” or “Money.” Read more Dr. Don columns for additional personal finance advice.