Author Topic: Investment Advise for Parents  (Read 1988 times)

OneCoolCat

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Investment Advise for Parents
« on: December 31, 2016, 11:44:44 AM »
My dad is 59 years old and is terrible with money.  He currently owes about 120k on his house, car and credit cards and has maybe 3k in cash (no investments other than his home which has maybe 10k in equity).

He may be settling a case to the tune of 225k post tax/attorneys fees.  The offer is there for him to accept.  He knows he needs to first pay off all of his debts and pay off his home.  This leaves him with roughly 100k and he is asking me how he can invest it with little risk so he doesn't blow it.  I'm so very happy he actually realizes this because most people with bad habits probably don't.

I was thinking maybe CD accounts at a local bank even though they offer a measly 1% annual return.  It's safe and he would be discouraged from blowing it on stupid shit, as he has a proven record of doing in the past, lol.  Other options I considered were treasury bonds but I know very little about this.  Anyone have any insight into what a very low risk investment would be?  I'm also worried about him giving it away as he is too trusting.

He will be living off disability for the next couple years, then he will be receiving social security.
« Last Edit: December 31, 2016, 11:51:31 AM by OneCoolCat »

cincystache

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Re: Investment Advise for Parents
« Reply #1 on: December 31, 2016, 12:13:32 PM »
You can't really protect him from his own stupidity. The fact that he's asking for advice is a great sign though.

One option is to delay taking SS benefits until age 70. This will allow his benefit to grow much higher than if he takes it at 62.

As for the 100k. If you're looking for something simple, I would recommend one of the vanguard life strategy funds

https://investor.vanguard.com/mutual-funds/lifestrategy/#/

Put it in one of those funds and forget about it for a decade or so...

good luck


Metric Mouse

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Re: Investment Advise for Parents
« Reply #2 on: December 31, 2016, 12:40:55 PM »
You can't really protect him from his own stupidity. The fact that he's asking for advice is a great sign though.

One option is to delay taking SS benefits until age 70. This will allow his benefit to grow much higher than if he takes it at 62.

As for the 100k. If you're looking for something simple, I would recommend one of the vanguard life strategy funds

https://investor.vanguard.com/mutual-funds/lifestrategy/#/

Put it in one of those funds and forget about it for a decade or so...

good luck

Sage advice, all around.  Hard to improve on that.

Physicsteacher

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Re: Investment Advise for Parents
« Reply #3 on: December 31, 2016, 12:42:22 PM »
What percentage of his basic needs will his disability and subsequent social security benefits cover? Will he need to draw on the $100k for property taxes, home maintenance, insurance, etc, or can it remain untouched for many years?

OneCoolCat

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Re: Investment Advise for Parents
« Reply #4 on: December 31, 2016, 01:14:52 PM »
You can't really protect him from his own stupidity. The fact that he's asking for advice is a great sign though.

One option is to delay taking SS benefits until age 70. This will allow his benefit to grow much higher than if he takes it at 62.

As for the 100k. If you're looking for something simple, I would recommend one of the vanguard life strategy funds

https://investor.vanguard.com/mutual-funds/lifestrategy/#/

Put it in one of those funds and forget about it for a decade or so...

good luck

Thanks for the reply!

Isn't there a lot of chatter about bonds being overvalued?  That's my biggest concern regarding lifestrategy income funds.

What percentage of his basic needs will his disability and subsequent social security benefits cover? Will he need to draw on the $100k for property taxes, home maintenance, insurance, etc, or can it remain untouched for many years?

Disability covers all of his living expenses as far as I know.

cincystache

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Re: Investment Advise for Parents
« Reply #5 on: December 31, 2016, 03:00:59 PM »

Thanks for the reply!

Isn't there a lot of chatter about bonds being overvalued?  That's my biggest concern regarding lifestrategy income funds.


There is ALWAYS a lot of "chatter" when it comes to investments. Generally speaking, those that can ignore it do better than those that try to act upon it.


Goldielocks

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Re: Investment Advise for Parents
« Reply #6 on: December 31, 2016, 03:19:22 PM »
I like the CD route, with the intent to eventually transform it into a fixed annuity when rates increase and he is older, so the monthly payout is quite a bit more than today.

e.g., in 15 years..?  so just needs to protect the capital in the meantime.

pumpkinlantern

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Re: Investment Advise for Parents
« Reply #7 on: January 01, 2017, 07:19:58 PM »
I think you have to consider the social/personal context here, not just what is theoretically best.

The advantage of something like a CD ladder is that if you have a GIC that is fixed for x # of years, it prevents him from taking out the money because he "needs" something.  Hopefully, after a few years he trains himself not to need the money or to think that he can just go and take it out whenever he thinks of something he wants to buy.