Okay, new to this board and have never done anything but 401k mutual funds sitting and holding. Just received a decent chunk of cash and need to put it to work. Let's just say I went from 10% cash vs IRA/401 to now 70% cash
Wife and I plan on being retired by Jan 2030 and will need 5 year bridge until she is 62. I will be 62 in '31.
Only debt is mortgage that is at 2.75 and paid off in '33.
I feel like we will be buying into the market at a premium right now, and based on what little I've read here and in other places there is a decent chance for a bubble pop before retirement in four years.
Also, I'm thinking whatever I do there needs to be enough income post 4 years to cover living expenses without drawing on principle much if at all during the bridge years.
With that as background, I will put 15% of cash into gov money for emergency fund no matter which direction I go.
Of the remaining cash I am thinking of this strategy: put 50% of the remaining in a fairly defensive portfolio with significant dividend potential to rollover for 4 years at probably 4-7% growth (gains plus rolled over dividends) but with a much lower crash dip at about 10-15%, the added positive of this strategy would be the ability to use the dividends post retirement for expenses during bridge years.
With the next 50% of the investable money, I was thinking of putting it in layered 1,2,3 year MGYAs at 5-6% to use post crash so we can buy low and during any bounce.
There are so many variables I'm kind of spinning my wheels at this point. For instance, if the crash happens do you switch your existing portfolio from dividend to more aggressive plays that are good deals and dividend cash be damned.
My questions:
1. What are the flaws in this strategy, what would you recommend to do different?
2. If a fund to buy post crash seems reasonable, are there better ways to keep it semi-liquid and get a better return than MYGAs or gov money (I'm assuming more rate cuts are coming).
Excited to have you guys pick this apart.
