Hi!
I'd need some support from the community to help my parents save on crazy MER's they pay. They are both approaching their 60's and have been pretty frugal their whole life. My mom, especially, had a high income and saved a lot. My father has never been a big spender either despite a lower income.
My father is retiring in a year and plans to run a small local fitness business that he's slowly starting (no income yet and not a clue how much he could make). My mom is a self-employed profesionnal working part time (2-3 days a week) still making good money and plans to continue for a few years. I know, they could have retired waaaay before if they'd known, but they are still in a good position.
In short, I know they currently have around 2M$ in investments with Fidelity (+ fully paid house + paid cars + other smaller possessions). The average MER they pay would be around 2% (I could confirm the exact fees) for a total of 40K$/year, which is absolutely incredible (probably their biggest ''expense'' all around). I figured if I could help them find a way to lower their MER's to a realistical 0.5% (or less) without adding much risk to their investments, that could save them around 30K$/year.
I know they don't have the interest and guts to manage their investments by themselves. I also don't feel comfortable enough to offer them to do it by myself since being a lot younger, my close to 100% stocks strategy is very different and not viable for them.
So my questions are :
- I know Vanguard offers Target Retirement Funds (with low MER's) composed of a balance of stocks and bonds depending on your age and retirement age. Being pretty close to retirement, is it too late for them? Is this a good option?
- Both being active and in good health, it's not irrealistical to believe that they will live another 20-25 years, if not more. So that's still a pretty ''long'' term. Being already financially independant and anticipating that their expenses will decrease in the next few years (I still have a brother and a sister living with them after what they'll probably sell the house and downsize), maybe a simple 3 ETF's strategy with more bonds for stability could be the answer?
- Or just look at their portfolio and replicate the same with low MER's ETF's?
I'm just starting to gather information for them. I'd like to have a solid plan before I officially introduce them to the idea.
Thanks!