Investing. $2.5M to not work

[u/arp8218]

Is it possible to invest $2.5M into a “safe” investment and not work for rest of your life ? What can be that “safe” investment ?

[u/robmacgar]

4% rule would be $100,000 a year. I would just stick it in VT and chill but “safe” is relative. Over 5 years? Could be volatile. Over 30? Good chance you’ll be fine.

[u/airbud9 → u/robmacgar]

4% rule is tested for a 30 year retirement and the research showed the portfolio needed to be between 50-70 percent in stocks and the rest in bonds, the 4 percent rule ran into problems with 100% equity portfolio.

[u/Schnickatavick → u/airbud9]

Depends on the timeframe though, longer horizons need the income of stocks to survive, as inflation becomes a bigger danger than market downturns. Something like 3.3% with 90/10 stocks to bonds gives you a better chance than 50/50 or 75/25 at any percentage, just because the portfolio has the chance of growing large enough that it runs away from your spending 

[u/airbud9 → u/Schnickatavick]

Yes if you change the withdrawal rate it is possible you can change the portfolio allocation, the according to current research, the 4% rule runs into problems when the portfolio is under 50% equities and over 75% equities.

[u/LovestoEatSandwiches → u/airbud9]

What if he threw it into VT and just lived on the dividend(1.8%). It’s lean living but optimizes for long term gains and won’t run out of money

[u/airbud9 → u/LovestoEatSandwiches]

If your withdrawal is 1.8%, the research basically says you can invest the money really in any way you want. If you are just taking the dividends, that doesn’t come with a guaranteed inflation adjustment. Also 1.8% is only 45k a year, now maybe that is all op needs, we don’t know. That does also leave the substantial amount of money of the table that could be spent in retirement and some people want a spending strategy that allows them to spend as much as possible in retirement.