I'm asking on behalf of a relative in his 70s. He’s selling his primary residence and expects to net about $500K from the sale. He’s trying to decide how best to invest the proceeds.
Here’s some context: He already has IRAs worth about $1.6M, invested fairly conservatively, with roughly 60% in bonds. He’s never tapped into these IRAs, as he lives comfortably on a pension and annuity. He’s asking me for investment advice because he’d rather not pay a financial advisor for assets under management when we can potentially handle this ourselves.
I’m hesitant to suggest bonds or anything with a heavy bond concentration for this $500K, given his IRA already leans heavily toward bonds. Plus, the brokerage account dividends would be taxed, so that’s another consideration. That said, he’s not looking to take big risks, but I’m trying to nudge him toward a slightly more aggressive approach since his financial reserves are strong.
Two questions:
- How would you suggest investing this $500K? He’s not keen on highly aggressive options but might be open to moderate growth-oriented strategies.
- How are bond mutual funds (like BND) taxed? Are the dividends taxed as ordinary income? At the long-term capital gains rate?
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