Personal Finance

I have $5.3 million in cash sitting in an IRA and I'm nervous about throwing it all back in the current market - what are my options?

David Beren

Published: January 18, 2025 2:33 pm

One of the most challenging aspects of finances is knowing what to do with money you want to put away for retirement. Whether you choose bonds, ETFs, stocks, IRAs, or something else, you have options available, but they all come with risk as well as tax pros and cons. 

One Redditor posting in r/fatFIRE  recently sold off some of his stock positions, which gave him around $5.3 million sitting in cash in an IRA at 50. Given this, he wants to do something but doesn’t feel comfortable returning it to the market, so he is looking for alternatives. 

What’s both unique and not unique about this post is that this Redditor has a problem similar to countless others. Having millions in cash is a great place to be, but knowing how to help it grow while minimizing risk is something millions of people struggle with. 

Large Cash Position 

This post shows a 50-year-old Redditor with approximately $5.3 million in cash currently sitting in an IRA. This money was accrued by selling off several stock positions, and the Redditor remains uncomfortable about reinvesting in the market. 

As he is looking to retire early, he wants his cash to be safer and has some beliefs about where the market will go over the next year. Right or wrong, this individual is undoubtedly well within his rights to say he doesn’t want to reinvest back in the market and explore alternatives. 

We know he wants to take around $1 million and put it into something low-risk that will earn around 4-5%. He also wants to put another $1 million into another type of account that would be low risk but earn closer to between 5% and 10%. The rest of the money would be held back until he finds another opportunity he is truly comfortable with. 

Currently, he is considering 1-year treasury bonds or investments into ETFs like VOO, VTI, SCHD, VIG, VT, or EVSIX. 

The Next Steps

First and foremost, neither I nor anyone in the Reddit comment section is readily identified as a financial advisor. With this much cash available, the Redditor should be reaching out to someone who can help create a portfolio and plan that truly works for his individual needs and risk level. 

This comment notwithstanding, the biggest red flag here is that he wants a 5-10% return on something considered low-risk, but this isn’t a low-risk return rate. There is a definite concern in this Reddit comment section, myself included, that someone managing money like this without knowing what to do creates a scenario that could lead to disaster. 

Ideally, he should be able to put the money into short-term treasury bills, like a one-year bond, and get his 4-5% interest. The same can be said for some CDs, of which he can likely do 12-18 months while earning north of 4% interest. 

In addition, a Money Market account, which is insured for up to $500,000 per account, would help him gain around 4.5% interest. The bottom line is that there are low(er) risk options for the Redditor to take advantage of today that he doesn’t seem to be exploring. 

Ultimately, treasury bills are his best bet, and he can do 6, 12, or 18 months, whatever he is most comfortable with. Regarding the second $1 million he wants to invest, there is no “low risk” option here that will get the level of return he wants. He’d be better off using the $2 million, earning 4-5%, and guaranteeing himself this rate of return with treasury bills. 

Knowing How To Invest

One of my biggest takeaways from this Reddit thread is that you don’t learn how to invest overnight. In many cases, it’s not something you learn at all, which is why financial advisors are so valuable, even if you have to pay them. 

As annoying as 1% can be every year for an advisor, they are far more knowledgeable about investing. Hence, it pays (literally) to have someone who can create an individual plan to get you to whatever financial goal you hope to achieve in the shortest amount of time.