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Subject:  Re: investments for the non-financially literate Date:  4/19/2013  3:48 PM
Author:  JLC Number:  72084 of 88033

Total about $680k.

They say they need $4000/month for regular expenses ($3,000 from SS) and another $1000 for extras like travel and expensive occasional things like major maintenance on the house. Hence wanting to generate $24,000/year off $680,000, a little less than 4% so it seems doable.

Here is my take from the info.

Of the $680k, I'd place at least $72k (3 years expenses) in a money market fund. For more cushion, $120k (5 years expenses).

For ideas on simple portfolios check out this link. IIRC, most of these are as few as 3 funds to as much as 10, re-balance quarterly to yearly.

Do note the standard deviation of returns, there is a significant chance that there will be a negative return in any given year. Thus the advice for a 5 year cushion in money market.

Or, it might be possible to build and dividend generating stock portfolio with about 10 stocks and all well known companies. These lists are of companies that have paid and increased their dividends yearly over the past 10-25 years.

Don't get hung up on yield alone. 5-10 years from now, after some of these companies have increased their payouts, the effective yield would be much higher.

If they have to have 4% plus now, you can mix in some higher yielding stocks.

(NOTE: I can't vouch for this site, it just has an easy to read format and is for illustration only).

The big risk as that a company cuts or stops its dividend. Good examples would be BAC (Bank America) and GE in 2008/09.

This is how I'm setting up my portfolio for retirement.

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