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I have posted this on other boards and I was recommended to post my question here. I will have $125,000 from a land sale. It will not be needed for credit care debt, groceries or college. It is for my retirement in 15 years. How would you invest it? Gold, Stocks, Bonds, Real Estate? I am not able to tolerate too much risk. I am very interested in your comments.
Ellen
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Fools would suggest you invest as much as you can in an S&P 500 Index fund. That is because historically over time, the S&P gives reasonably consistent returns of 11%--better than you can expect in bonds.

Real estate can be an OK investment, but you will need to make the effort to select the right property at the right price and manage it. That may not be easy, and if done wrong can certainly cost you. So at least be cautious.

If you are uncomfortable with risk, then your choice is probably putting some of the money in bonds. Owning the bonds themself in a laddered maturity bond portfolio is the best way. Consider tax free bonds if they make sense in your tax bracket. If you are risk averse, you can put up to 50% of the money in bonds, but less is better, especially if you are young.

Gold and gold stocks have been doing very well over the last six months or so. Most think this is a temporary situation. No one knows how long it will last. Therefore, I would avoid gold.

Best of luck to you.
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I would also recommend an S&P 500 or total market index fund, combined with bonds.

Some other specific suggestions (if anyone else can provide some url's, I would appreciate it):
- while you may not want the hassles of managing your own real estate, you might want to check out REITs. They allow you to have some ownership of real estate without having to deal with managing them and in a more liquid form. One concern is that a lot of their return comes in the form of dividends, so it may be best to hold them in an IRA, but it is a good way to get another asset class in your portfolio
- when considering bonds, you may want to look into TIPS or I-bonds. With TIPS, you again have some tax issues, but especially if it is going to be a while until you need the money, these bonds make sense. This way you have the security of U.S. bonds while maintaining the inflation protection.
- you probably want to at least investigate the efficient frontier information on asset allocation. These are set up to help you figure out what sort of percentages in each type will help you get the highest return. Since you are more conservative, you may want to weight the more conservative asset categories (REITs, bonds, etc.) more heavily than is totally efficient.

Just my $.02,
FriendlyGirl
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Is that $125k before taxes? If it is just land, you will owe taxes. If it is your homestead, if you meet certain guidelines you may not owe tax.
May I suggest Vanguard.com? They have the funds mentioned by other posters and they have very low expense ratios compared to everybody else.
Or, to make it easy, just put it in an envelope and send it to me, and I will take care of it for you. :>)

Good luck.
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Is that $125k before taxes?
No this is after taxes. I have another chunck of change in a money market account for April 15, 2003 for taxes on this.


Or, to make it easy, just put it in an envelope and send it to me, and I will take care of it for you.
:>)

You are not the first person who has made this suggestion, but I will gracefully decline. I would like to be able to retire without the fear of being a bag lady in front of the "5 and dime store".
Ellen
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I had a similar amount to invest not too long ago (also from the sale of real estate). I am closer to retirement than you are and I had already gotten a fairly good start on my nest egg, but this is what I did with it:

- Put spent about 30% on I-Bonds. I was fortunate enough to get into them before the interest rate dropped so precipitously. Mine pay either 3.49% or 3% for the base rate.
- Used about 5% to fund mine and my wife's IRA for two years. We opened IRA Brokerage accounts with Vanguard and had them buy TIPS for us.
- Put a chunk in Vanguard Total Stock Market Fund.
- Put a chunk in Vanguard Tax Managed Small Cap Fund.
- Put the remainder in a Vanguard MM fund from which I dollar-cost-average into the two funds above every month (over about a year period). The ultimate result (that is, the total of the "chunks" and the DCA effort) will be that about 45% of the total will be in Total SM and about 20% in TM Small.

This approach may or may not be right for you.

jtmitch
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Just a question here: Why are you risk-averse when you won't be retiring for 15 years?

You have a long time to ride out any volatility you run into, and you clearly do not need the cash any time soon. If you go with low/no risk options, you are potentially walking away from a lot of growth.

Anyway, if you insist on lower volatility investments, here's a few ideas:

- REITs (as mentioned above)
- Low-beta stocks. I'm thinking of things like water and other still-regulated utilities, the most boring of financials, stuff like that. Most of these pay substantial dividends, which would cushion any drops in stock price.
- I'm not sure if this is necessarily low risk, but how about more real estate? Its would seem that you have some aptitude there.
- I-bonds, TIPS, munis and maybe highly-rated (like Aaa or Aa1) floating rate corporate bonds. The trouble with a lot of fixed rate instruments is that you will get killed when rates rise.

The trouble with many of these options is that they pay out a fair bit of current income and therefore are not totally tax-efficient. However, that's usually part of the price you pay if you insist on low volatility investments.
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Just a question here: Why are you risk-averse when you won't be retiring for 15 years?

As for me, I'm not averse to the "stocks fluctuate a lot" risk. I am averse to the "stocks might not perform better than bonds in my lifetime" risk. The latter is the reason I diversify.
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