I was thinking of putting 200K of the lump sum in fixed assets (bonds and money market) for 4 years...withdrawing 50K/yr and managing the 500K in small cap value stocks.I figured 4 years is enough time to ride out stock market bumps. I did the calculation and I think I came up with a 14% return averaged over 4 yrs would beat a 5K/mo pension check. I read Kiplinger's and all the time and they feature investors who have over the period of 4 years averaged returns of greater than 60%...

I'm sure I could start a newsletter tomorrow and do the same thing. I could show you a guy who got 60% last year, and then a month later should you a guy who got 50% last year. What I don't do is come back a year later and show you that the guy who got 60% took a 90% nose dive in year 2.

Small caps are not the magic bullet. In fact the latest Smart Money magazine had an article discussing how in recessions small caps are not what you want to invest in, you want to invest in S&P 500 companies that produce necessities (medicine, food, power) and are on firm footing. Quite a few people are predicting a recession around the corner. If a recession hits hard, you're going to be real glad for that monthly check.

Lara Amber