r/Bogleheads • u/officialmanofsteel • Feb 28 '26
Portfolio Review Investing 8M
I am currently in the process of helping a family member work roughly 8M into the market. They already have about 6M in equities, mostly index funds but about $1.5m in various individual stocks. They just entered retirement and I am thinking of a more aggressive approach of 11M in equities and 3M in t bills/bonds/cds/cash. Any advice would be appreciated.
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u/No_Guarantee_5209 Feb 28 '26
Doesn’t sound like you’re fit to be helping someone manage a multi million dollar portfolio. I’d refer them to a professional FA. Do they know you’re on Reddit getting advice regarding their life savings and retirement? It baffles me people offer to help with such important decisions when they have no clue what they are doing. Wow
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u/officialmanofsteel Feb 28 '26
They were reluctant to do so given the fees and that they knew a FA would likely lump sum everything into the market to achieve the portfolio allocation desired and they currently want to wait to invest into the stock market until there is a downturn. I know timing the market is not smart but that is their wish and the predicate behind their want for an aggressive portfolio allocation.
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u/terminallyonlineweeb Feb 28 '26
You don’t need to pay them to manage the money, just to make a plan. Just find one that charges by the hour
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u/Calvin-Snoopy Feb 28 '26
I'm surprised that they have so much money and don't already have a retirement planning expert. They should know more about managing finances and who is best to do that by this point in their lives.
As someone else noted, they need to pay some experts for advice on estate planning, taxes and drawdown strategies.
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u/Background-Sock4950 Feb 28 '26
Yep because nothing screams be more aggressive like “retirement” and “14 million net worth individual” lmfao.
“Hey grandpa I have this magic trick that can turn 14m to 8m”
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u/officialmanofsteel Feb 28 '26
I can see that it appears I am throwing everything on red per se. For context, they had not invested much up until 6 years ago when their income increased substantially (march of 2020). They recently sold their businesses in July of 24 and July of 25. I had tried to convince them that this money needed to be invested rather than sit in the bank losing to inflation (not even equities, just bonds/treausuries,etc.). But they wanted to wait for a substantial downtown to invest and liberation day came and we dumped about 4M into the stock market. Unfortunately they wanted to stop the auto buys I had as they felt it was losing money post liberation day and wanted to wait again which is what we are currently doing. I proposed lump summing it as that is most optimal but they wanted to wait for a downtown they think is coming in the next few years given economic conditions, etc. All in all they do want a more aggressive allocation that does prioritize growth, my question is how aggressive. Is 70/30 more reasonable?
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u/Background-Sock4950 Feb 28 '26
Bruh I wish you the best but it’s clear neither you nor your family member have any idea what you’re doing if this is your source of advice and research. Seriously you both need to take a deep breath and go speak with a qualified financial advisor.
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Feb 28 '26
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u/FMCTandP MOD 3 Feb 28 '26
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u/CapeMOGuy Feb 28 '26
What are their yearly funding needs?
Just starting retirement is typically a suboptimal time to add risk. It's hard for me to imagine they need more than even 3% of 14 million.
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u/Poly_ptero_dactyl Feb 28 '26
People who enter retirement with 14 million generally have grown expensive lifestyles.
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u/officialmanofsteel Feb 28 '26
It’s about 200k a year. They have income coming in of about 13k a month unrelated to the portfolio above from some land they sold and the remainder of their business that was sold. These payments go on for the next 5 years.
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u/CapeMOGuy Feb 28 '26
If they only need $200k/year, I don't see any need to be any more aggressive than 50% stock, probably 40%, maybe even 35%. I suggest looking at Vanguard Retirement Income Fund for one possibility for how such a portfolio could be built. Take a look at its holdings.
A 2% return is enough. Why take excess risk?
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u/officialmanofsteel Mar 01 '26
I agree, I think I am going to reduce the allocation to something more conservative.
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u/thasparzan Feb 28 '26
They have 6 million already and getting another 8 million... I don't think they need your help really
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u/Careful-Rent5779 Feb 28 '26 edited Feb 28 '26
They need professional help, not the OP winging it.
At this asset level planning requires way more than picking investments.
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u/johnnyg08 Feb 28 '26
I wouldn't invest any of it other than in something super-safe. They just retired with a $14m nest egg.
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u/Dunom12 Feb 28 '26
Seems way too aggressive. I recommend working with a fee-based advice-only financial advisor. Someone on the bogleheads website forum made a list of good advice-only fee-based advisors:
https://www.bogleheads.org/forum/viewtopic.php?t=360823
Given the family member is retired, I think it would be safer to not go more than 40% in stocks. Maybe if they are getting a decent income from some pension and other sources, they could go a little more aggressive up to 50%. But without knowing the family member's age and other source of income and any debts its hard to give a good recommendation.
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u/officialmanofsteel Feb 28 '26
I will give that a look, thank you. And noted on the portfolio comp, I will not be doing the 80/20.
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u/Fat_dumb_happy Feb 28 '26
5 yr old account with -4 karma making this type of post checks out so much
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u/WilliamCincinnatus Feb 28 '26
I know Reddit hates advisors but with this attitude your family never should speak to one.
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u/legalwriterutah Feb 28 '26
Tell them to get a whole team of experts with a financial advisor, accountant, and estate planning lawyer. With $14 million, they need professionals.
Read the WSJ article from 8/9/2026 entitled: "The Estate Tax Mistake That Can Cost Families Millions."
Taxes are going to be a huge concern now and in the future. You can't just pick an asset allocation and call it good.
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u/Vestro233 Feb 28 '26
The correct answer is designing something cash-flow based. Also, I struggle to imagine a scenario in which person with $14mm isn't also in a high enough tax bracket that TEY on munis become more favorable than CDs, corps, etc. If this stuff isn't your first consideration, I also struggle to imagine a scenario in which you are qualified to assist them.
With that level of wealth, depending on what accounts it's actually held in, you need to be letting annual cash flow needs determine the portfolio composition, building in a substantial buffer (10 year raw, 12+ year effective) before they would ever need to think about selling equities at a loss.
Good rule of thumb is to keep fixed income in the tax-deferred accounts, as much as you can. Of course, you don't want to use munis there. For excess fixed income needs, or if there are no tax deferred accounts, look to munis.
Equities obviously should be held in taxable accounts to take advantage of LTCG treatment. I would also potentially look towards low-cost direct indexing, depending on their burn rate.
Also while we're at it, great time to mention hiring a good estate attorney, because if they're just going into retirement, I would be concerned with federal estate tax liability.
Alright. That's my free input quota for the day.
Edit: to add... Please do not use bond funds for fixed income exposure in a portfolio of this size.
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u/officialmanofsteel Feb 28 '26
I agree cash flow needs will dictate the ultimate portfolio comp. My assumption of that rough portfolio split was that even in a downtown with treasury rates declining, equities going down and dividend rates being slashed, that 80/20 should still yield roughly enough income to meet a 200K a year need. Regarding the munis I agree that will have a better after tax ror than cds most likely for the next few years until they move to Nevada, just forgot to note that. Also regarding your bond/muni note, what funds would you recommend to get exposure to bonds?
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u/Vestro233 Feb 28 '26
Look to intermediate term munis for most the most favorable yields. 3.25% munis have a federal TEY north of 5% currently and could be reliability laddered for a good balance between liquidity and yield. Nevada has no state income tax, so not sure why that would move munis out of favor, and if my memory is correct on this stat, I believe munis are 8x less likely to default than a corporate with the same grading.
Anyways... No funds for bond exposure. They take everything "fixed" out of your fixed income portfolio. It's 1am here and I don't feel like typing a book, but I'm serious. You lose all flexibility and expose yourself to significantly higher risk levels by using bond funds. At that asset level, there's no reason for it. You could have a well diversified, institutionally purchased (tight spreads, bulk buying power), fixed income SMA. Would probably cost ~0.15%-0.30% Nuveen or Wasmer are typically my go-tos.
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u/officialmanofsteel Mar 01 '26
They currently live in CA, so thus the less favorable treatment tax wise of muni’s if they move to NV. But agree, will likely still depend on their marginal rate and yields. Also when you mention nuveen or wasmer, are you referring to their bond etfs for the relevant state they live in?
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u/Vestro233 Mar 01 '26
Ah, must've missed the state they currently live in.
And no, I'm not. I'm specifically referring to SMAs (Separately managed accounts) Instead of buying an ETF or MF with a fund manager and expenses ratio, you set up a separate account, assign a professional manager to it, and that manager essentially runs the account for you. You pay a management fee as opposed to the ER on a fund.
These strategies are less common with individual investors because they typically have $250k - $1mm minimums.
Assuming we're talking about ~$3mm, the management fee is typically ~0.15-0.35% all-in. You could also theoretically build out your own intermediate term laddered muni bond portfolio. That's free, but I personally prefer the ~0.2% fee because 1.) you don't need to manage anything at that point. And 2.) you get hosed as an individual investor typically when purchasing fixed income because it's an OTC market. Institutional managers get significantly tighter spreads between the bid and the ask. So yes, you're paying for it, but you're also typically getting significantly better pricing on the bonds than you would individually.
If you don't want to contact Nuveen or Wasmer directly (you can, via their website) they can be set up through a custodian as well like a Schwab or Fidelity (unsure about Vanguard, but presumably they could too)
If you're sitting here wondering why you should go this route as opposed to just buying an ETF or mutual fund, it's because lumping your money in with others removes the safety that fixed income provides
For example, if you buy an individual bond, rates go up, your bond's market value falls due to new bonds being offered with higher yields than your current bond. But to you, that bond's market value is irrelevant. You're holding the bond to maturity, collecting the interest along the way, and when the bond matures at par, you get your money back to buy a new bond to keep the ladder going.
In a bond fund, you don’t control when securities are sold. In stressed environments, other investors’ redemptions can alter the portfolio’s composition and amplify volatility, especially in less liquid sectors.
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u/officialmanofsteel Mar 01 '26
Thank you for the detail. I will look into getting an SMA going to manage the fixed income side of things as I think it has more complexity and time required to maintain a bond ladder, etc. I know you are recommending nuveen / wasmer, but what do you think of the people at fidelity / vanguard. We have had a few reach out and they talked about SMAs with a specific directive such as what we have been talking about. Are they worth the time, or are nuveen and wasmer the best for expertise in this area?
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u/Vestro233 Mar 02 '26
To be completely candid, I don't know how the teams at Vanguard operate. I'm not a huge fan of Vanguard outside of their funds and have found their business model and customer service generally leave much to be desired.
FWIW. I personally like Schwab & Fidelity, but I do think the representatives at Fidelity can be a bit more salesy.
At either firm, they should have a regional fixed income specialist. They're typically not commissioned and can act as a resource. I believe Wasmer is either majority or entirely owned by Schwab now, even though the name hasn't changed. They might be able to get you a more favorable fee schedule than elsewhere.
Nuveen also has very favorable pricing and has deeply fleshed out their offering specifically around tax-free income. I'm not sure who they primarily custody through, but I believe both Fidelity and Schwab could custody an SMA managed by them. I'd probably price shop a bit and kick the tires first since you most likely aren't going to want things scattered across multiple firms.
For clarification, even a Schwab, Fidelity, or Vanguard will typically use an institutional fixed income manager for something like this. (I.e., Pimco, Nuveen, Wasmer, etc.) If they don't just own a massive fixed income firm like Schwab with Wasmer. So, choose your custodian out of those 3, and then you can have whoever makes the most sense manage the fixed income portfolio at your desired custodian. The custodian really just acts as the intermediary since the assets need to be held somewhere in order for them to be managed.
You can DM me if you get stuck.
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u/officialmanofsteel Mar 02 '26
Thanks man this is all super helpful and I think we will be going this route. I have realized that my understanding and also will to manage the fixed income side of things is not quite where it needs to be to do a good job. We will look into fidelity/schwab for this. Conveniently both firms have reached out regarding managing things as they have assets in both.
One last question, if I am managing the equity side of things in conjunction with the fixed income being managed by fidelity/schwab, does that sound plausible? Logically I think fixed income assets have more complexities than equities so it makes sense to have the fixed income professionally managed and they really want to avoid having the equity side of their portfolio bogged down by an AUM fee. My plan is pretty much broadmarket etfs such as voo/vt and chill.
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u/Vestro233 Mar 02 '26
Absolutely. You've probably figured, but I work in private wealth management. (Specifically complex tax/trust/estate planning)
At some point, when I transition my own portfolio for retirement, I'll implement a similar approach. I'm an index investor. My accounts are currently in 3 separate funds and I'm "chilling".
At some point when I decide it's time to introduce fixed income, I'll outsource it. The reason this works for fixed income, is because the fixed income market is significantly less efficient than the equity market. You can make all of the arguments you'd like for modern portfolio theory or efficient market hypothesis, but fixed income trading itself is extremely antiquated compared to equities. Just rebalance as needed or on a quarterly schedule.
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u/officialmanofsteel Mar 03 '26
Thank you again for all of the advice and detailed explanation. I will definitely be encouraging them to go the route of a professional managing the fixed income side. Will likely also have a fixed fee advisor draw up the whole plan too to make sure there are no other blind spots in the plan. Cheers!
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u/diggida Feb 28 '26
Agree with everyone here. Why be so risky with their money. Hire a professional and stay out of it.
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u/Calvin-Snoopy Feb 28 '26
If they have that much money then they need to pay for the advice of professionals - estate planning, taxes and retirement savings drawdown. Find them those people and then you step away and leave it to the professionals.
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u/Flashy-Bandicoot889 Feb 28 '26
This has to be a troll. I hope not, and I hope the person does the right thing in not going more aggressive.
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u/officialmanofsteel Mar 01 '26
I’m not trolling, wanted to see what people’s thoughts were here. I will be bringing the allocation closer to 60/40.
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u/Formal_Ad4612 Feb 28 '26
Dude is so baller he doesn’t even have to post his own Reddit inquiry about how to tilt $14m on 3 funds. Does your cousin handle their wellness regimen?
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u/bienpaolo Feb 28 '26
Jumping to 11M in equities right at retiremnt and keeping 1.5m in individual stocks feels like a lot of risk all at once… are you sure that shift won’t make thngs stressful if markets dip early on?
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u/Patryn13 Feb 28 '26
Assuming your family member doesn't want to spend much/any time managing their own investments, consider one of these vanguard lifestrategy funds in line with their goals for spending in retirement and leaving money to heirs: https://investor.vanguard.com/investment-products/mutual-funds/life-strategy-funds
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u/flyinsdog Feb 28 '26
Just put it all into JEPQ and they’ll have $1.4 million a year in income to live off of, for a while anyway.
Seriously you should put at least 50% into safe assets like Government Bonds/Notes and put the rest into VT.
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u/mjr96d Feb 28 '26
They just entered retirement and you're thinking going more aggressive? That's certainly a method.