High, safe returns don’t exist

Dear Liz: I’m getting about $500,000 from the sale of my business this year and next year will be getting an additional $1 million. What’s the best way to invest the money so I can make $150,000 to $200,000 a year? I am 55 years old and will have no other income than what I can earn with this money.

Answer: You probably know that “guaranteed” or “safe” returns are very low right now. If you’re getting much more than 1% annually, you’re having to take some risk of loss. The higher the potential returns, the greater the risk.

So even if you could find an investment that promised to return 10% to 13% a year, there are no guarantees such returns would last, plus you would be at risk of losing some or all of your investment. A down draft in the market or an extended vacancy in your real estate holdings could cause you to dig into your principal.

That’s why financial planners typically advise their clients not to expect to take more than 4% a year or so out of their portfolios if they expect those portfolios to last. If you try to take much more out or invest aggressively to earn more, you run a substantial risk of running out of money before you run out of breath.

Related Posts

  • About to retire? Get some help Dear Liz: I am approaching being able to retire in three years at 56, but I'm really concerned with the current market conditions. I have […]
  • What’s a “safe” withdrawal rate? Dear Liz: After working all out for 28 years in a small business, I have put away $2.6 million in stocks, bonds and some cash. (I am a […]
  • Windfall in your 50s? Don’t blow it Dear Liz: I am 56 and will be receiving $175,000 from the sale of a home I inherited. I do not know what to do with this money. I have […]
  • Don’t invest emergency cash Dear Liz: I always hear you talking about having an emergency savings fund. Most people that I've heard talk about this recommend keeping […]


  1. Liz in Boston says

    It’s possible (maybe even likely) that if the writer is selling a business he or she grew from scratch, he or she may be an expert in the field and could supplement a 4% draw down from that 1.5 million over 2 years by consulting in the industry in which he/she held the business. For example, if the business was in tech or medical or even consumer sales, consulting to other businesses about how to run a successful business in that field could bring in some part time work that might still allow for plenty of free time to travel or golf or whatever. Not everyone is suited to that type of consulting work, however; it takes a willingness to sell yourself and a definite confidence in your expertise.