Steady 4-5% on $5M?

If you mean 4-5% annual average return, just stick it in a total stock market index fund. There's no reason to pursue interesting or creative ideas or even spend any brain power researching all sorts of options.

Since its inception in 2000, VTSAX has an average annual return of 7.18% [0]. That's 20 years, multiple US presidential administrations, multiple people running the Federal Reserve, and a big economic downturn (2008) thrown in. It's boring and won't give you any cool stories to tell at parties but you'll likely get the 4-5%.

[0] https://investor.vanguard.com/mutual-funds/profile/performan...

Assuming that in order to preserve wealth you are targeting 4-5% safe withdrawal rate (including inflation adjustments), an all-weather portfolio or risk parity type of portfolios can serve this purpose well and designed to be very resilient and robust to different market environments.

Checkout various implementations of these portfolios:

1) Understanding All-weather portfolio: https://ofdollarsanddata.com/ray-dalio-all-weather-portfolio...

2) The Permanent Portfolio: https://www.bogleheads.org/blog/2014/09/11/harry-brownes-per...

3) Golden butterfly portfolio: https://portfoliocharts.com/2016/04/18/the-theory-behind-the...

4) All-in-one Risk Parity ETF based on an actively managed index: RPAR ETF: https://rparetf.com/rpar

5) Wealthfront risk parity mutual fund WFRPX: https://research.wealthfront.com/whitepapers/risk-parity/

There's no low risk options. The fed is holding interest rates so low that everyone is struggling to find a place to invest money.

The economy is in a strange place right now. Record high tech stocks with near record high unemployment. Incomes and stocks temporarily inflated by governement rescue money worldwide. An oncoming eviction/default bomb that governments keep kicking down the road.

If I had a significant amount of money I would half in US bonds and half in a Swiss bank account to ride out this volatility.

Look at Buffet, he's putting his money in Japan, a traditional safe haven currency outside USD

Many comments here are quite inaccurate saying "REIT / Real-Estate, High div stocks, solely VTI/VTSAX." These are not steady 4-5% and have very real risk of losing 50% within a year.

The safest way to steadily return 4-5% nominal is an approximate mix of:

55% VT (Global stocks) 40% BND (Total US Bond Market) 5% GLDM (Gold)

Whether that ends up being a real 4-5% return, as opposed to nominal or a definite 3% real, will depend on inflation.

More info on bogleheads.org

Triple Net Lease (NNN)

https://www.investopedia.com/terms/t/triple-net-lease-nnn.as...

Think of it like owning the property that a popular Starbucks location rents.

Obviously, the retail landscape has changed irrevocably in 2020.

AT&T give 7% dividend. VZ give 4.5% dividend. There should be good quality stocks which easily pay 3% dividend. If you do drip in 4 to 5 years it might become 4%-5%. But always there is a risk though

This is the whole premise of FIRE[1]. Invest in a S&P index fund and you should be able to pull out 4% or so without ever running out of money.

1. https://old.reddit.com/r/fire

Steady 4-5% is a lot in North America, considering the rate is low at the moment. If you are willing to invest in some other parts of the world, 4%-5% could be the norm, for example China 10Y- bond is at 3.157% and you could probably find some relatively safe bonds with 1% above 10Y bond. But then you are going to be exposed to exchange risk and political risk. So far I don't really see any "safe" option here.

In Canada we do see 2% - 2.5% GIC offerd by some of the banks from time to time with a bit of bonus (say $1,500 maximum), but it's still far from 4% to 5%.

High dividend stocks or REITs.

Some markets are currently paying more than 4% as a whole: https://www.starcapital.de/en/research/stock-market-valuatio... . Russian stocks pay above 7%. Asian REITs have high dividends as well, e.g.: https://sreit.fifthperson.com/

Real estate should still be a good bet for 4% real. It would be better with leverage if you could borrow at least 50% at some outrageously low rates but it’s not passive.

As others have written, there is no sure way of generating steady 4-5% in current markets. So think about what do you want to use the money for? Can you reduce your future known expenses or buy something now that you know you want?

If you have a mortgage, probably worth paying it off.

Invest in reducing energy costs -- insulation, renewables if in right place.

If you want a yacht, buy it now and rent it out until you need it.

Be the first mover to build FTTH networks in underserved communities. Infrastructure has the benefit of a nice steady long tail of recurring revenue.

The first question is 4-5% real or nominal. I.e. 4-5% or ~6-8% nominal?

A classic diversified portfolio is your best bet. Ie bit of everything

Selling covered calls on blue chip dividend stocks. Fixed income etc

stocks, stocks and stocks. if you want something safe, buy some index. maybe something form a sector you understand a bit about or just go with s&p500, etc.... there is nothing safer than that.

personally i pick my own stocks. so far i am +35% since december and i was at +60% recently. it fluctuates but i am a long term investor so i just chill and don't sweat about it.

in the end it depends on how much work you are willing to "invest". you can flip alcohol or houses or daytrade but it all requires time and effort and it just becomes a job. hence i advocate for long term investing.

I can do 20% on $2.5MM easily with only $500K at risk trading options.

Edit: I'd love to hear input on why people are scared of options.