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If you have some experience purchasing your own stocks, you might want to consider adding still a third leg to your diversification stool by investing a third of that money into a well diversified portfolio of Real Estate Investment Trusts (REITs). You could easily obtain 7%-8% in dividends plus some capital appreciation with a buy and hold strategy.

You could learn about them by reading Ralph Block's book (called Investing in REITs, I think) and taking one year subscription to the Realty Stock Review throught NAREIT. This, however, might involve more work on your part than you want to do.

REITs are only 20% to 30% as volatile as stocks and tend to move rather differently, making them a rather safe diversification vehicle. If you choose your own REITs a significant part of the dividends are treated like capital gains. REIT mutual funds are also available, but do not offer all the same advantages. It's something to think about, anyway. I'm already retired and I really like REITs. I don't have to sell stock to get income.

P.S. I don't care for bonds and don't know a great deal about them, but I dare say that (in the long run) interest rates have only one direction to go from here (a long ways up) and bond values will be heading in just the opposite direction (a long ways down). So I would imagine the ideal time to buy them is when interest rates are fairly high.
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