Help Me Retire: I’m 67 and retired with $2 million after investing in McDonald’s and Facebook — but now I think I should ‘park my money.’ What should I do? 

Long ago, I converted my 401(k) to an IRA, which has enabled me to triple some of my portfolio thanks to my early, risky investment in Amazon
AMZN,
+1.59%,
Tesla
TSLA,
+0.18%
and Facebook.
META,
+3.49%

I am at a crossroads. I don’t want to take risks with my investments, and I don’t need to. It’s time to park money to preserve my principal. About 30% of my portfolio now is in various short-term CDs, 3-month Treasurys and the rest are in money market funds.  I am good for now, but I think a better option would be trimming my stock investment and long-term 10 or even 20 year Treasury? Am I doing the right thing?

Uncertain and anxious

See: I’ll be 60, have $95,000 in cash and no debts — I think I can retire, but financial seminars ‘say otherwise’

Dear Uncertain,

Congratulations on your retirement! 

I want to focus on one thing first: you say you don’t want or have to take risk anymore, but I would caution you to reconsider that. I’m not saying you need to throw your money into very risky investments, but it is healthy — sometimes even necessary — to diversify your investments. 

Wanting to preserve your principal makes complete sense. You were successful investing in individual stocks for years, which is great, but definitely a risky strategy, and I completely understand why at this point you would want to eliminate all risk. 

But some sort of risk can be good. Here’s why: You’re 67 years old, and you’re retired now. Nobody knows for sure how long they’ll live, but when planning your finances, it’s better to err on the side of longevity because having that money last your entire life is ideal, while running out of money before you die is not. As a retiree, your income is likely fixed now, and you’ll be relying on your investments, along with anything else like Social Security or a pension, to take care of all of your expenses. You could live another 20, even 30 or more years, and it would be in your best interest to have your investments support you during that time frame. 

A little bit of healthy risk can help you there, since those investments could work for you in generating some more money. 

I can’t tell you how exactly to invest your money. I’m not a financial adviser (and specifically, I’m not your financial adviser). My goal with this letter and all others in this column is to give you a few things to think about as you make your plans. It wouldn’t hurt to go to a qualified financial planner to ask them what exactly you should invest in, or how to break up your Treasury investments, though. If you don’t want a long-term relationship with one, you could even find a planner that would do a one-time check up on your finances, and provide a few suggestions for the best investments in your particular situation. 

Also see: I’m 70 and am thinking of going back to work to qualify for Social Security. Should I? 

CDs and Treasurys are looking pretty good these days, what with the high rates attached to them, so it makes sense to want to put some of your money in those. But you also don’t want to lock up all of your money in any type of account, because if you need to take any of it sooner then you won’t generate the return you’re expecting (or you may end up even spending a little bit of money). Regardless how you end up investing, or where, be sure to have liquid assets available, outside of your regular day-to-day cash flow, for any emergency situations. As a retiree now, you might want to have the equivalent of  a year (or more) worth of living expenses in an emergency savings account. 

As for risk, trying to find the next hot stock probably isn’t the best strategy, even if you’ve had some success in the early days of those big companies, but try to assess just how comfortable you are with any sort of risk. Keep in mind your risk tolerance and your risk capacity — the former is how much risk you’re comfortable having in your investments whereas the latter is how much risk you need to meet your financial goals. Try looking at exchange-traded funds, since there are so many options there, like ones tracking index funds or specific interests and values.

Read: Opinion: The 9 best Vanguard funds for retirees

A financial planner can help you in this instance too. They’ll be able to help you figure out how much money you should expect to need in your lifetime and how to manage your investments so you attain it. It would definitely take the guesswork out of this very situation. 

Readers: Do you have suggestions for this reader? Add them in the comments below.

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