Author Topic: Allocation recommendations  (Read 1803 times)

Cwadda

  • Handlebar Stache
  • *****
  • Posts: 2182
  • Age: 25
Allocation recommendations
« on: January 23, 2015, 01:26:11 PM »
Hi Folks,

I'm separating my dad from his adviser, transferring his rollover IRA to Fidelity, and am planning on using the Spartan series index funds. My dad is almost 63 years old and is not depending on using the money for retirement. What kind of allocation should I use for his case?

Thanks!


nereo

  • Senior Mustachian
  • ********
  • Posts: 10331
  • Location: la belle province
    • Here's how you can support science today:
Re: Allocation recommendations
« Reply #1 on: January 23, 2015, 02:17:43 PM »
Yikes.

This is a highly personal question, and it's made even more difficult for us because it isn't even for you - it's for a third party.

What you need to do is sit down with your father and find out what his goals are for this money.  You said he doesn't need it right now to live off of, which is good.  Find out how much volatility he can stomach (hint - almost everyone says they can stomach more than they really can.  it's human nature).  Ask whether he's more interested in protecting the principle, or if he's more interested in having it grow over the next 10, 20+ years.

If it sounds like he wants to protect principle and just know the money is there in case he needs it, then you will invest differently than if he wants this to be some sort of legacy/donation/inheritance fund that he'll pass on in 15-25 years. 
I know this is a bit of a 'non-answer' but you haven't really given us sufficient info anyone to give you a reasonable answer.  Best of luck!

Cwadda

  • Handlebar Stache
  • *****
  • Posts: 2182
  • Age: 25
Re: Allocation recommendations
« Reply #2 on: February 17, 2015, 08:38:30 AM »
Okay, I had a discussion with my dad. There is currently $135k. He wants to protect the principle but is also interested in having some gains for the next 10-15 years. He wants to be "moderate".

Bump for more replies.

Cwadda

  • Handlebar Stache
  • *****
  • Posts: 2182
  • Age: 25
Re: Allocation recommendations
« Reply #3 on: February 17, 2015, 02:01:01 PM »
Friendly bump.

I'm thinking of going
60% total stock market
40% bonds

all in Spartan series of course.

nereo

  • Senior Mustachian
  • ********
  • Posts: 10331
  • Location: la belle province
    • Here's how you can support science today:
Re: Allocation recommendations
« Reply #4 on: February 17, 2015, 03:12:41 PM »
Friendly bump.

I'm thinking of going
60% total stock market
40% bonds

all in Spartan series of course.
at age 63, for money that isn't necessary to live off of I'd feel comfortable recommending a 60/40 allocation.  If it were me I'd be much more heavily weighted towards stocks, but since your dad explicitly said he wants to be "moderate" - that suggests less volatility.

But really - AA is such a personal choice that there's no right answer.  Run some simulations on FireCalc with 60/40 allocations for 5, 10 and 15 year periods and show your father the different outcomes.  At least then he'll get an idea that 'it could go up by this much, but also down by this much'.  Goodluck

slugline

  • Handlebar Stache
  • *****
  • Posts: 1167
  • Location: Houston, TX USA
Re: Allocation recommendations
« Reply #5 on: February 17, 2015, 03:29:17 PM »
Was your father invested in stocks during 2001-2002 and 2008-2009? How did he react? His disposition regarding volatility should be your guide to how aggressively to go with equities..

I tried to tell my own dad that the last thing you want to do in a crash is sell low, but I couldn't prevent him from doing exactly that!

Cwadda

  • Handlebar Stache
  • *****
  • Posts: 2182
  • Age: 25
Re: Allocation recommendations
« Reply #6 on: February 17, 2015, 05:45:45 PM »
I'm going with 65% FSTVX (US Total Stock Market Index) and 35% FSITX (US Bond Index Fund). I think that sounds pretty good. We'll try it out for 3 months and see what happens.

I'm sick to my stomach about the fees I'm seeing so I'm thinking anything will be better than the current.