What would you do if you have a $1ml cash and close to retirement

[Farzan Setayesh]

What would you do in this market with $1 ml cash? We are at the top of the cycle and every asset seems a bubble close to bust? Sit tight and wait for another down turn, or find off market deals and flip? Living in Chicago , with high taxes and rising even more. 

[Dave Foster]

@Farzan Setayesh, I'll be the curmudgeon here.  It seems that everyone is ignoring the second part of your title post - "close to retirement".  Assuming that this represents a significant portion of your net wealth then preservation and safety are the components you're looking for at this stage in your life and this stage in the market.

Anything requiring appreciation is a non-starter.  You can get hurt much worse than you can gain from appreciation at this time in the market.

Anything requiring you to learn a new skill like stepping into a new area of investing - say lending or flipping or whatever is a non-starter.  There's always a rookie tax except at the bottom and this market is at the opposite of the bottom.  

1. If you want to invest actively then keep a substantial amount in cash and don't throw it all in the ring.

2. Buy your retirement home and use it as a rental for a bit.  Selling your current primary residence is probably tax free and would be a nice move to generate cash as you close in on retirement.  If you're buying the house you want to retire in it won't matter if the market corrects and it drops a bit for a while.

3. Use some of that million to get your self completely out of debt including your primary. Then make sure you're fully funded in your IRA. Then if you want to use small amounts to buy investment properties using maximum leverage. You're out of debt and your primary residence and retirement accounts are safe at that point. So you and the bank will be sharing risk - you your down payment and the bank the principle of the loan. I never advocate walking from a property but in this age the banks are always taken care of so you should protect yourself first as well.

4. Invest where you are only providing money and only with the most experienced and proven investors and companies.  And by experienced that would mean having a track record that goes back before 2009.  

No matter what others say, $1 mil is real money.  Protect it.