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Ask HN: Absolute Safest Investment for Inheritance

4 points by ActorNightly ↗ HN
Im getting ~$800k after taxes from my grandparents will. I want the safest possible way to invest this money, something I can just leave alone and not manage and without any risk involved, no matter how small the interest rate is.

Is a CD ladder pretty much the default way to go for this, or is there anything better?

14 comments

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khuey
How quickly do you need to be able to access this money in the future? If immediately, put it in high yield savings accounts. If you can tolerate a bit of a delay then a CD ladder or a ladder of treasuries is the way to go. If you're using banks for either savings accounts or CDs mind the FDIC limits. You'll probably need to split that much across multiple banks.
ActorNightly
Not at all. I have everything I need from my job income. I really just want something that generates minimal income and I don't have to think about it.
deadeye
As a former financial advisor, my advise is to find a one-time fee only financial advisor.

If anyone were to answer this question without you asking a bunch of questions first is doing you a great disservice.

Here are some factors:

1- how old are you? 2- what are your current debt situation? 3- what are your current investments? 4- what is your current income? 5- what is your current liabilities? 6- when do you plan to use this money? 7- is the 800k in some sort of inherited retirement plan like a ira or roth ira? 8- what is your current marginal tax bracket?

Etc, etc...

You'd be surprised how big of a mistake you can make here by doing the wrong thing.

idontwantthis
Second this (not a former financial advisor) Too safe can be just as bad as too risky. If you want to buy a house this year, sure keep it in cash. But if you want to still have this money 20 years from now, then you'd probably want to invest some of it. You don't need to do one thing with all of it, and a FA can help you understand your preferences and timelines to be smart with it.
ActorNightly
1. 30s

2. House mortgage

3. 401k, some money for emergency fund floating around in index funds

4. 200k+

5. See 2.

6. My plan is just to secure minimal income for free. I could live off of 30k a year if I have no other expenses.

7. Cash from a house sale.

8. 24%

deadeye
As it stands now, I'm still bound by my license and can't recommend anything.

I assure you though, those are just the beginning of the relevant questions that need to be answered.

VikingIV
I believe what deadeye is suggesting here isn't necessarily that you need to share your answers, but that this is only an essential, introductory line of questions typically used when evaluating investment vehicles best suited to you — particularly when seeking qualified advice from a licensed professional. A lot of people end up in various depths of DIY wealth management before realizing they really don't know it all, and advisors dedicate years of their lives to licensing and continuing education on the matter. A large part of this is leveraging acceptable risk per-client/investor.
jjice
Based on you looking to have 30k per year, maybe consider looking into the Financial Independence community and their considerations on this. Sounds like you could be pretty damn close to FI with a conservative safe withdrawal rate.
f0e4c2f7
3 month T bills may be appealing at current interest rates.
jtchang
One thing you should get out of your head is that there is zero risk. Even keeping it all in cash in a checking account has risk.

CD ladder isn't a bad choice. A treasury bill ladder could also work and might actually fit as well. The risk is in a rising interest rate environment the t-bills you buy now will be worth less in the future. You'll still get the dollars in absolute terms but it might buy less. Too bad you can't buy I-bonds past 10k a year.

Also the biggest risk in your plan is the "leave alone and not manage". There is manage a little, manage a lot, or pay someone to manage it for me. Leaving it alone and not managing it has its own risks.

ActorNightly
>Even keeping it all in cash in a checking account has risk.

Besides the obvious FDIC 250k limit, can you clarify this? I don't see how leaving the money alone would have any risk.

VikingIV
Inflation outpacing your account's interest rate is a risk factor which FDIC doesn't insure against. While your balance won't decrease, its buying power relative to the current dollar will weaken.

E.g. an $800k purchase in 2003 would now cost $1.3m.

ActorNightly
Inflation % vs interest % doesn't directly matter. If Im spending under a certain amount of the interest income, and reinvest the rest, its always going to be inflation beating.