Owning a comfortable home can make you feel more secure as a retiree. So can having a nest egg to draw from. If you have $143,000 in cash, you should be doing something with it, as having that much money sitting in the bank isn’t a good idea as you risk missed opportunities and losing ground due to inflation.
But what should you do with that money? Since you’re already retired, you have to be a little more cautious about your investment options than your younger counterparts — at the same time, $143K isn’t a ton of money, and you can’t afford to be too conservative either. Fortunately, if you already own a home, you at least know you’ve got an asset to fall back on if needed.
Here are some things to consider before you invest that cash.
Investing involves uncertainty, which is the last thing many of us want right now. The U.S. is undergoing a leadership change, and the incoming administration has made it clear they plan to shake up the status quo. There’s also a significant threat of global war due to conflicts abroad. As such, the stock market may be more volatile than ever in the coming years
While these risks are very real, the risk of being too conservative also can’t be discounted. If you’re just spending your money without earning returns, it’s more likely your funds will run out while you still need them.
Your best bet is to balance “riskier” investments with higher potential returns and safer investments that will earn you limited gains. A common rule of thumb is subtracting your age from 110 and putting that amount in equities. Using this rule, a 66-year-old would put 44% of their money into equities and 56% into fixed-income investments, such as bonds.
This approach can limit potential losses in a market downturn, especially if you keep some funds in cash. This way, you won’t be forced to sell equities to provide income during a market crash. If you’re retired and need to draw from this money, limiting losses and avoiding too much exposure to market fluctuation is crucial.
Read more: Are you rich enough to join the top 1%? Here’s the net worth you need to rank among America’s wealthiest — plus 2 ways to build that first-class portfolio