06-02-2015, 11:31 PM
RIP to your loved one. Here's my assumptions:
1) Mom has 31 years to live.
2) Mom has $1M.
3) Needs $5,000 monthly.
4) Future rate of inflation is 4%, so $60,000 a year needs to grow 4% per year.
Mathematically, your Mom would need an average rate of total return of 8.54% (not dividend yield). The only place you'll achieve that return is in equities. As has been mentioned, high-yield is dangerous. Currently, a reasonable dividend yield of companies with solid financials is 2% to 4%, so your Mom will need to tap equity monthly in the beginning. Hopefully within 15-20 years your Mom will be receiving her principle back annually in the form of dividends.
Considering your Mom will be relying on this money, I do not advise a DIY approach.
1) Mom has 31 years to live.
2) Mom has $1M.
3) Needs $5,000 monthly.
4) Future rate of inflation is 4%, so $60,000 a year needs to grow 4% per year.
Mathematically, your Mom would need an average rate of total return of 8.54% (not dividend yield). The only place you'll achieve that return is in equities. As has been mentioned, high-yield is dangerous. Currently, a reasonable dividend yield of companies with solid financials is 2% to 4%, so your Mom will need to tap equity monthly in the beginning. Hopefully within 15-20 years your Mom will be receiving her principle back annually in the form of dividends.
Considering your Mom will be relying on this money, I do not advise a DIY approach.