My dad is in his mid 50s right now, and he has ~500,000 in his savings account. He has approximately 1 million in his 401k. He feels bad that he missed out on the rally of the past 9 years and wants my help to invest the 500k he currently has in cash.

I'm a bit hesitant to tell him to throw it all in equity-based index funds (mainly because he's coming very close to retirement) so I'm a bit confused as to what advice to give him.

Also, judging by the fact that he hasn't invested this money already, he's probably on the more risk-averse side of the scale.

I've been thinking about recommending that he look into real estate and maybe get a condo to rent out? I don't have too much experience with that though, so I'd appreciate any pointers on the pros/cons with that strategy. Also thinking about recommending CDs. What do you guys think about other investments? Munis? Corp Bonds?

Would appreciate any other ideas/investments that would suite his risk profile. Thanks!

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    What was the $1million in? Did he "miss out" in his 401k too or does he just wish that ALL of his money had been in equities?
    – D Stanley
    Sep 24, 2018 at 20:57
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    Also, what training or expertise do you have to help your dad invest? Why not just hire an investment advisor? I personally wouldn't want to be responsible for a half million dollar investment account without some expertise.
    – D Stanley
    Sep 24, 2018 at 21:22
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    The amount of money involved is too large for someone with little experience to advise. Have your father get some professional help. Sep 24, 2018 at 21:48
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    Will you be the one to blame if your dad isn't happy with the investment?
    – void_ptr
    Sep 24, 2018 at 22:22
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    Get a condo? Seems to me like pretty high risk and high maintenance investment, especially if you are not an expert in the real estate field!
    – Daniel
    Sep 25, 2018 at 13:47

3 Answers 3


You are asking about how to allocate money. We can't give you an optimal solution to that problem because no one really knows the necessary parameters to solve it. The best you can do are some general guidelines. You can get allocation advice for free by signing up for




Those services won't steer you wrong on the basics. I suggest them as a starting point.

There are a couple of basic bits of advice to follow, whatever you do. For example,

  • Don't buy municipal bonds unless your father is in a very high tax bracket
  • Don't buy any funds with a very high expense ratio (say, above 1%) or with a 12b-1 fee. In fact, try and stay low on the expense ratio. Consider index funds.
  • Diversify across asset classes (domestic and foreign stocks, bonds, primarily).
  • It's bad to use a financial advisor in most cases. They will charge you 1-2% of your father's wealth every year and put you in expensive funds to boot.

One note: Your question suggests that you believe that people should shift away from stocks into bonds as they age. This is not well-supported by finance theory. There is an optimal mix of risky bonds and stocks that is the same for everyone--though we don't know what it actually is. What differs between people is how much money to put in risk-free securities (money market and such). This depends on the person's risk aversion. Risk aversion may or may not increase as a person ages. Your father's words as stated in the question question suggest that me may not, actually, be very risk averse.


Buying property and renting it out is high risk. It only takes one tenant who doesn't pay the rent, then wrecks the place before leaving, to wipe out any income you were hoping to receive.

A standard market tracking equity fund is one of the most popular options if you want better returns than cash. But it isn't risk free. If the stock market goes down, so does the fund.

Government bonds are lower risk, but lower returns. Other bonds are as risky as the company or organisation that issues them.

With that amount of money, there's nothing to stop you spreading it across multiple funds. But multiple funds of the same type isn't really reducing the risk much.

Avoid anything too clever. If the person offering you an investment can't explain it to you in words you understand, turn it down.

If you do go to a financial adviser, read everything they give you, however much that is. You may find that the product they are selling will generate a lot of money for them, while locking you into a long-term investment you don't want. Don't be afraid to say "no" if it's not what you want.

  • I would agree with the rental property and index tracking fund advice. I would disagree with the implied "safety" of government bonds. They are not risk free when inflation and government fiat are present. He stands to lose purchasing power over time with money in bonds. A broad market index fund for all but short term financial needs is "the safest" IMHO. Definitely agree with the statement "avoid anything to clever."
    – rocketman
    Sep 25, 2018 at 2:06
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    @rocketman Simon didn't say government bonds are "risk free"... he said they "are lower risk".
    – TripeHound
    Sep 25, 2018 at 8:11
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    To add to the tenant thing - we had one who outright refused to leave the property AFTER refusing to pay rent for like a whole year. He was incredibly hard to get the sheriff to issue an eviction since he knew how to silently flee. It took another year for him to mess up badly enough where the swat team raided our house. He came back and stole all the copper out of the walls and flooded the house. $20k in damage. There's a lot more to the story but it's not like we didn't try. Rental property definitely has its risks
    – Kai Qing
    Sep 25, 2018 at 23:02
  • @kai Qing Did you manage the property by yourself? Did you or the property manager check credit history/background search. The motive of this question is to access the risk even if normal precaution is taken.
    – qqqqq
    Oct 11, 2018 at 23:55
  • @qqqqq - It's family property. I'm not sure what they did for screening back then. I know they run background checks these days. Still, even a good background check can lead to psychotic tenants and extreme cases. They don't happen a lot to us, but we've had a few over the past couple decades. Overall we always came out ahead so it's not like it was a crippling loss when we had to deal with the bad cases.
    – Kai Qing
    Oct 12, 2018 at 0:02

I'm going to tell you what other people should be telling you.

If you are asking this question, you are NOT presently suited to invest your dad's money. Please tell him to seek out a reputable financial adviser, and/or you can help him put the money into something like Betterment.com where they do the portfolio management for him (you).

Good luck and please do the right thing here. If you love your dad, you really should admit to yourself that you do not currently have the experience or knowledge to do this well.

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