Financial Adviser | Investment income for a potentially long retirement
QUESTION: I am a 53 year-old male returning to Jamaica from Canada to retire, and I need advice on how to invest $10 million Jamaican to support myself in Jamaica with no other income. I have a residence in St Ann, with no mortgage, and a 1990 pickup truck in good condition that can be used for a time but will require replacement thereafter.
FINANCIAL ADVISER: It seems that you have a long retirement coming up, but without the financial means to carry you through it at a high standard of living.
Although you will not have the major expense of accommodation, there are, nonetheless, significant expenses that you will have to contend with. These will increase with time due to inflation and, if your health fails, the expenses to be incurred could be significant. You have also highlighted the need to replace your motor vehicle. This will reduce the pool of funds available to meet your living expenses.
I would not expect you to deplete your principal, so your main concerns would have to be regular income and security of principal. With the sum that you have and the low rates on interest-earning instruments, I am not hopeful that you would earn enough to adequately carry you on for an extended period. It seems you would have a difficult time even if you are a frugal spender.
It would be unwise to attempt to make significant returns on your money by investing in the more risky instruments such as stock. You are not in a position to take significant risks.
Having said that, though, if you have a skill that can be used to generate additional income, I suggest that you give serious thought to using it to earn.
Perhaps you could also use your motor vehicle to generate income, although I am not able to say what would be the best way to do so. You would have to see what opportunities exist or can be created where you intend to live.
How do you feel about sharing your house with others? Depending on how it is structured, you could rent a portion to generate rental income. Perhaps you would need to make some changes to it to facilitate renting it.
I do not know why you are coming home now and why you are retiring at such a relatively young age, but, if at all possible, I suggest that you delay your retirement plans so you can earn over a longer time and have more money to spend over a shorter period. This does not mean I am suggesting that you do not return home, but it is worth considering that you could still have many, many years to live.
At the end of the day, only you can determine your retirement lifestyle. Your desired standard of living will determine the cost. You do not have much room for error.
n Oran A. Hall, principal author of 'The Handbook of Personal Financial Planning', offers personal financial planning advice and counsel. Email: firstname.lastname@example.org