I'd invest it in a diversified portfolio mostly in stocks and live off the proceeds. A 2% portfolio yield would mean an income of $400K before taxes. Plenty to live on and not touch the principal for a long time.
Oh, sorry. I'd keep the same portfolio allocation I have and I write about on my blog: 80% stocks and 20% bonds. Both stocks and bonds will be invested in broad market index ETFs / index mutual funds.how much fixed income? would you consider a bond ETF, as far as stocks would you consider an ETF or individual dividend stocks?
you mentioned $400k before taxes which is dividend yield, does one pay tax on 200k (50% capital gain) or the whole 400k because it is a dividend yield? I guess what I am asking is dividend yield considered capital gain (I am still a novice in investment concepts)
Agreed. My post should be seen in the context of what I'm implicitly assuming the goals are. i.e. continue to maintain the same or slightly higher lifestyle than present.I think we need to take one step back. What are your goals for the rest of your life? Do you want to move to Beverly Hills and start living (and maintaining) the high life? Or would you just pay off your now-meager debts, quit your job and continue living as before, perhaps buying a new house and car?
IMHO you should answer these questions for yourself first.
runner in the remote chance that you really did win a 20M lottery or inherited the same, won't you please run asap to a top-notch investment counsel. Look for the CFAs, nothing less.
you see, the very rich don't have portfolios that look normal. They hardly need bonds, for example. So all the usual constructs that you've heard about, and which you're trying to apply, aren't relevant.
on the other hand, if you're posting about your own portfolio and it's a normal one, say something between 10k and a few hundred thousand, perhaps you could say so.
no dividend yield is not considered capital gain. It's taxed as dividends. These are not the same thing as distributions from income trusts.
there's another investment student whose thread is nearby in this forum. He or she has received some great advice from spidey & moneygal. If you're actively working on your own circumstances, then the same suggestions could apply to you.
The problem with investing $20m in bonds is that after inflation and taxes, it will be hard not to tap into capital. If I instead invest $20m in stocks, I could fairly safely spend the dividends and not worry about outliving capital in my lifetime. Add to it the preferential tax treatment for dividends, I think a strong case can be made for an all-equity portfolio.I'm very interested (and somewhat surprised) by the responses from the prominent bloggers.
I expose my money to market, interest rate, and currency risk (among others) only because I risk not achieving my objectives without so. If I had that sort of money, my focus would move away from maximizing returns (while reducing risk as much as possible) and simply getting sufficient returns to do what I want to do. Call me cheap or frugal, but $200,000 per year is good enough for me to live on.
My team of accountants (I've always wanted a team... ) would help minimize tax liabilities, and I think I'd contribute a lot to charities through trust accounts etc.
2% return is good enough for me.