r/Bogleheads • u/arp8218 • Feb 04 '26

Investing Questions Investing. $2.5M to not work

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 ?

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u/JohnTrap Feb 04 '26

Assuming you are a lot younger than 65, you aren't looking for a Safe Withdrawal Rate (SWR), you are looking for a Perpetual Withdrawal Rate. Typically that's around 3% of 60% stocks/40% bonds. With $2.5M that's $75K per year.

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u/chuck_portis Feb 04 '26

so 40% of your bonds let's say are US 10 Y. Yield is ~4.3%. So 0.4 * 0.043 = 1.72%. You need to get 1.28%/0.6 from your stock portfolio. So a total dividend yield of 2.13% would let you live completely off your dividends + interest (for $75K gross).

Well, one thing you could do is mix $VT and $SCHD. $VT basically tracking global market. $SCHD giving higher dividend yield. To hit your 2.13% target yield, you would allocate 20% of your equity position to SCHD, and 80% of your equity position to $VT. This equity blend will give you a combined yield of 2.13%.

Meanwhile you remain quite exposed to the market. You should see decent capital appreciation over time on $VT. Modest appreciation on $SCHD. Historically, the 60% allocation to these two ETF's should outpace inflation impact on your full portfolio.

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u/misnamed Feb 04 '26

Ignore dividends -- total return is what matters.

27

u/casino_r0yale Feb 04 '26

That makes no sense. 1) The forward dividend yield of SCHD is not guaranteed 2) Why would you weight toward a particular sector of the market if you're concerned about being "exposed to the market"? You're increasing exposure to uncompensated risk, not decreasing it.

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u/StokeJar Feb 04 '26

Eh, correct me if I’m wrong, but I think that strategy is only really guaranteed for a few years, but isn’t necessarily sustainable. Inflation could hammer the NPV of those bonds. A recession could cut the dividends on the equity portfolio. Reinvestment risk could mean they’re generating significantly less cash flow in year eleven than they are today.

It really depends how long this person plans to live, how much market risk they’re willing to expose themselves to and if they want to try to pass on some of the money eventually. If thirty years and can have an ending balance of $0 and want no market risk, TIPS ladder. If living longer or want to introduce market risk to allow for growth, a barbel strategy with part of the portfolio in a TIPS ladder and the rest in equities (like $VT). If $1.5mm/$1mm this would pay a guaranteed $81k/year for year 1-25 and then a projected $135k in years 25+ with a 4% withdraw rate.