How to invest $640,000

purpletrampoline

Hello, I'm a long-time lurker but it's my first time posting anything so please be kind. I also am not sure if this is the right place for this query but here goes...

I (F/36) started my own business a decade ago and after a few hard years, it started to earn more than I needed to live. So I managed to save a lot. I didn't have much time, though, so I put off investing as I didn't feel comfortable investing my money without taking the time to learn about my options first.

A couple of years ago, I became a SAHM and because of the time constraints, I sold a large part of my business. As you can imagine, I didn't have oodles of time while caring for a baby either so I didn't get much chance to research. So now I have approximately $640,000 sitting in various bank accounts. This makes me feel very nervous whenever I think about it because inflation! lost opportunities! if you're not investing, you're losing!

But when I go to research investments and plan something out for the money, I end up more confused than when I started. Which is why I'm reaching out for advice as well as different perspectives. Even if nothing entirely constructive comes out of this, if I get insights that I didn't have before, it will be worth it.

So, in a nutshell: I'm in my mid-30s, I have about $640,000 saved up. My partner currently makes a healthy salary (low six figures), which is enough to pay for bills - i.e. housing, food, childcare, and a few extras but it doesn't cover everything (we live in an expensive city). I still have an income stream from my business of around $1,000 per month and I get another $5,000 or so every 12 months (so total not quite $20,000 a year which covers my personal expenses and some "extras" for our family.

Once my child is in full-time school, I plan to work part-time on my business and I guesstimate I'll be able to earn at least $36,000. Given all that, I think I won't need the $640,000 in the near future and can/should invest for the long-term. We don't own our home.

Here are some of the options I've been considering:

- 4% Rule: I'm not even sure how this works exactly but I think the gist is invest the lumpsum into an all-world ETF with plans to withdraw 4% a year (~$25,000/per year minus taxes) which means I can contribute to our family income without having to really worry about work and can take work on hobbies like gardening and painting. The cons are: nervous about investing at ATHs and worried that the lumpsum won't be there for my retirement.

- Rental properties: To be clear, I have no experience with rental properties but knowing myself, I will pound pavement and find out everything I possibly can if I go this route. I think this money may be enough to be able to start a rental property LLC and generate cash flow while also preserving the initial capital. Is it?

- Divvy it up: I'm not sure on the allocation I should do so would like advice with this. I was thinking of: 50% into an all-world ETF with no plans to withdraw, 20% into a rental property that will eventually become a vacation home in a cheaper country that I enjoy visiting, 20% towards buying a home where we currently live, and 10% for "alternative" aka risky investments - i.e. crypto, Masterworks, Fundrise?

Any thoughts and advice very much appreciated.

MX5huggy

You’ve used dollars $ through out your post. What country are you based in? 

purpletrampoline

MX5huggy said:

You’ve used dollars $ through out your post. What country are you based in? 

Sorry! I've immigrated to the UK but my savings are in USD.

El_Torro

You mention dollars (US dollars I assume). Do you live in the UK? If so then why do you have all these dollars? If you don't live in the UK then the suggestions we give will be of limited use as almost all the posters on this forum are UK residents.

Buying a home is certainly a good use of money. Both financially and for quality of life. 

Putting what you can into a pension would be good for you as well. Both now and once you start earning again. For example you can put 100% of your earnings into a pension and live off your savings. This suggestion assumes you are in the UK though, as I'm not clear on how pensions work in other countries.

I don't think I can suggest much more until we clarify the whole dollars issue.

Daliah

If you are planning to stay in the UK for any length of time, you should be seeking the advice of an Independent Financial Adviser with experience, or at least knowledge, of offshore savings/investments. Your residence and tax status will be critically important, too.

MaxiRobriguez

Daliah said:

If you are planning to stay in the UK for any length of time, you should be seeking the advice of an Independent Financial Adviser with experience, or at least knowledge, of offshore savings/investments. Your residence and tax status will be critically important, too.

+1 for go see an IFA. You have the assets to make it worthwhile and your situation (SAHM, foreigner) make it doubly worthwhile. 

dunstonh

Sorry! I've immigrated to the UK but my savings are in USD.

Are you a US citizen?  if you are then be prepared for limited options and many firms not being able to offer you advice or products.  If you are not, then its more straightforward.

tebbins

+2 for IFA. There are a lot more things to consider, that only a good IFA specialising in immigrants/US citizens/offshore assets could walk you through - your immigration status and its implications, how long you intend to stay, your partner and children...

purpletrampoline

Thanks for the advice, everyone. I guess an IFA is the unanimous answer. Have started searching for one now

MX5huggy

The important bit is the I FA independent. Don’t use a FA or Wealth Manager. 

MoJoeGo

There's also the question of tax liability - although you've emigrated, do you still have to file US tax returns and pay the IRS tax on your global income?

A lot of UK institutions don't want the hassle of FATCA reporting so you might find a lot of simple investment options are not available to you.

(which is just my way of saying +3 to the IFA suggestion, but ideally one that's experienced with US ex-pats...)