Looking for thoughts and ideas

[Blonde Granny]

My house is for sale, no mortgage and built during a time of lower prices in 2013.  My so called financial advisor seems to be a little standoffish recently, so I don't think he'll be getting the proceeds for the house to invest.

I have a lot of brokered CDs and most are paying fairly well and have some long maturity dates in the future.  I also have about the same amount in some "funds of funds"..and there are plenty of bonds in that...so let's not discuss that, I can change it at any time, but for now....I need ideas.

Proceeds from the house will be about $225K.  I don't own any individual stocks or Vanguard funds, no index funds etc.  My intent is to have enough income from the $250 to cover the apartment rent of approximately $1300/mo.  That would allow me to continue taking no money from current investments to cover monthly bills.

Please don't just say invest in "index fund" tell me which one....what about Vanguard funds....worth it?  Individual blue chip stocks? don't forget I need the income so something paying a 1.5% dividend or interest isn't likely to help much.

[The Virginian]

Blonde Granny,

I sold a rental property last year and had a similar decision to make. I always choose individual stocks over Funds ( I just hate paying the middle man fees) My situation was that I wanted to make sure my children would get a check for the rest of their lives since their mother passed away. It was a priority of mine.

An index fund might give you good returns "over time" but my method assures you good income from day one !

The $225,000 if invested correctly will cover your rent for the rest of your life - guaranteed !

First - Open an account with an online Broker - But Do Not Get a financial advisor - Do it yourself !

You can do it with Vanguard but I personally like Schwab -

Open a Brokerage Account - Fund the account by transferring your money to them - ( By check or Bank Wire transfer) they will assist you if you need it.

Next - You are going to need a 7% return of Dividends which means the combined stocks need to yield an average of over 7% when combined. $225,000 x 7% = $15,750 per year or $1,312 per month !

You need to have enough stocks to spread out your risk - I would suggest at least 25 Stocks @ $9,000 each. This way should the unthinkable happen you have limited your loss in any one stock to a maximum of $9,000. ( These might have to be weighted towards the higher yielders to ensure enough income at first)

The next thing is to spread out your risk into various market sectors ( and Sub sectors) , that is : Communications, REITS, BDCs, Utilities, and possibly MLPs ( Can be a real headache at tax time with K-1s) .......

After you invest - If you can - Wait at least one full quarter (3 Months) - hopefully two (6 months)  before withdrawing funds to give your self a cushion. You can set it up for your Schwab bank account to pay the rent automatically each month and you will earn a small interest on the accumulated funds in the bank account.


I will post a list of my picks tomorrow !

[ArchietheDragon]

If you are truly just looking for monthly income, what about an immediate payout annuity?    $250k should be able to generate a monthly income of about $1500 a month for the rest of your life.    And then you don't need to worry about managing it, when to sell if not generating enough dividends or income, etc... you just get a monthly check.  Nice and easy peasy. 

[Blonde Granny]

TV: I have an account at Ameritrade. 1/2 of my money is in the brokered CDs, the other half is in what used to be called Amerivest (now called Selective Portfolios). It is a managed income of 1 very conservative portfolio.  This has been doing very well for the past couple of years and I do sneak $250 each month to pad my monthly income a little. I currently live on SS from my late husband and from VA disability called DIC (Disability Indemnity Compensation). The VA payment continues till my death as hopefully will my SS.

7% seems like an undoable objective with todays current dividends and interest. But I do like the suggestions so far on what categories to look at, i.e utilities, Reits, etc.. Reits have always been one of my favorite sectors, and my very favorite is Realty Income. I also appreciate the idea of 25 stocks @ $9K each. That makes it seem a little more manageable.

As for the 7%, are you talking yield or dividends and interest. And yes, I can give myself a nice cushion now so that's not an issue.

I plan on trading in my 2017 Mercedes for a 2017 Honda CRV since I'll no longer be doing interstate long distance driving, and there will be a cash back involved, even after they pay off the current small auto loan. Right now the brokered CDs are making the $500 car payment which then can be put against the rent....so technically I will only be needing $600/mo from house money to make the rent payment. At least I believe I'm thinking correctly. Nothing like second guessing all my decisions....and I appreciate your help so far.

on edit: To correct the number of portfolios in the Select Portfolio from Ameritrade.

[Blonde Granny]

Archie, I've been burned before with annuities..........I would much rather be responsible for my own money. I also am not interested in increasing some insurance sales persons income for 2017.

[Blonde Granny]

Thanks wxyz.....I'm 72 and will be moving back home to Nebraska when the house sells. And you're right, my experience with annuities isn't good. But after one high class and highly rated financial advisor when DH retired at age 51 in 1996, and having to kick Mr. Wonderful Cool Dude to the curb, I have this thing about giving up control. You however, have given me something to think about.

[The Virginian]

Blonde Granny - Here are the stock picks I promised - Sorry it is so hard to read. If you like you can PM me your email and I will send it to you so that it stays in table form and will be much easier to read.

 

Symbol Name Sector Current Yield % Cost Per share
$ # Shares Amount to Invest Annual
Dividend Yearly Income Monthly Average Income
1 T AT&T Communications 4.60 42.44 185 8,000 1.94 $358.90 $29.90
2 STWD Starwood Property Trust REIT 8.58 22.39 400 9000 1.92 768 64
3 OHI Omega Health Investors REIT 7.89 31.55 285 9000 2.48 706.80 58.90
4 NRZ New Residential REIT 11.41 16.94 530 9000 1.92 1,017.60 84.80
5 O Realty Income REIT 4.27 59.06 135 8000 2.53 341.55 28.46
6 DUK Duke Energy Utility 4.17 81.62 98 8000 3.42 335.16 27.93
7 CCP Capital Care Properties REIT 9.21 24.80 362 9000 2.28 825.36 68.78
8 MAIN Main Street Capital BDC (Business Development ) 5.91 37.33 214 8000 2.22 475.08 39.59
9 BXMT Blackstone Mortgage Trust REIT
Commercial Real Estate 8.10 30.62 293 9000 2.48 726.64 60.55
10 CIM Chimera Investment REIT
Specialty Finance 10.21 19.49 461 9000 2.00 922 76.83
11 APTS Preferred Apartment Communities REIT
Apartment Buildings 6.82 12.94 618 8000 .88 543.84 45.32
12 AINV Apollo Investment BDC 9.29 6.46 1,230 8000 .60 738 61.50
13 VGR Vector Group Tobacco/Real Estate 7.71 20.88 430 9000 1.60 688 57.33
14 HTGC Hercules Capital BDC 8.37 14.95 535 8000 1.24 663.40 55.28
15 NLY Annaly Capital Management REIT 10.96 10.95 820 9000 1.20 984 82
16 SNR New Senior Investment REIT 10.55 9.93 805 8000 1.04 837.20 69.76
17 WSR Whitestone REIT REIT
Commercial Propeties 8.49 13.46 665 9000 1.14 758.10 63.17
18 STAG Stag Industrial REIT
Business Real Estate Investments 5.67 24.58 325 8000 1.40 455
37.91
19 VTR Ventas REIT
Health Care 5.13 60.46 132 8000 3.10 409.20 34.10
20 ARCC Ares Capital Business Developmnt 8.85 17.18 523 9000 1.52 794.96 66.24
21 CLDT Chatham Lodging REIT
Hotels 6.66 19.81 403 8000 1.32 531.96 44.33
22 JNJ Johnson & Jonson Consumer /Pharmaceutical 3.20 128.46 62 8000 3.20 198.40 16.53
23 PFE Pfizer Pharmaceutical 3.7 34.43 203 7000 1.28 259.84 21.65
24 APLE Apple Hospitality REIT
Hotels 6.3 19.06 419 8000 1.20 502.80 41.90
25 SKT Tanger Outlets REIT
Outlets 4.0 32.32 247 8000 1.30 321.10 26.75
26 SPG Simon Property Group REIT
Malls 4.12 169.40 47 8000 7.00 329 27.41
27 WPC WP Carey REIT 6.51 61.12 130 8000 3.96 514.80 42.90


TOTAL Avg Yield= 7.06 %   Yearly Income = $16,006.69   Monthly Income $1,333.82

The annuity is okay but like you I don't trust them.

I have identified 27 Stocks – Which means an average of $8,333 each but I have weighted my picks slightly above the 7% Yield Goal.
This System not only meets your objective but has a built in “cushion “ of $33 per month.

Yes it is very heavy in REITS but - As you can see REITS cover a very broad spectrum - Hotels, Outlet Malls, Commercial Properties, Health Facilities, Apts, ......... so they are really well diversified.

Under this plan You can expect your Income to actually rise each year. Since you have a small amount of “extra” income being generated you can buy more stocks each time your account reaches say $500 or $1,000. In addition you can expect at least half of these stocks to increase their Dividend amounts on a yearly basis. I would conservatively estimate the Income generated to rise about 2% each year.  This would ensure that your rent was covered in the event of a rise in rates.

Also - Your original investment would stay intact so that if you have children or relatives, charity --- you could pass it on to them. 

PS : I own almost all the stocks listed so I am not just pulling stocks out of nowhere !

Good Luck and feel free to ask me any questions if you need to!

[Blonde Granny]

Wxyz......so I buy this annunity at age 72, what happens to the money when I die at 75.

[Blonde Granny]

I agree completely wxyz........after talking with my son, the current decision of selling and moving has been tabled.


My son is willing to drive down here if needed, but suggested I stop worrying about what might happen and instead enjoy my life here.  

I do have the list from the Virginan and will keep it for further use.  Thanks everyone for your information and ideas.

[dee27]

BG, you have to make the best decision for your life. I thought your decision to move was abrupt, but you did have life changing events last year. You are lucky that your son is willing to visit as needed, but you seem happy where you are living now. Best of luck in whatever choice you make.