Author Topic: Looking for Advise for Dad  (Read 1494 times)

OneCoolCat

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Looking for Advise for Dad
« on: May 26, 2017, 10:46:42 AM »
My dad has settled a workers comp claim and is going to be left with around 100k after he pays off all of his liabilities (mortgage, car and credit cards).  He has a history of making poor financial decisions and is very risk adverse.  He is already on disability and can make ends meet on that monthly income once his home and car are paid off so the 100k will not be a lifeline.  The goal will be to spend it all during his life but to make it stretch as well.  He is 59 and not able to go back to work.

I was thinking maybe something like Vanguard Total Bond Market Index Fund (VBTLX) would be relatively safe.  Any thoughts?

GizmoTX

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Re: Looking for Advise for Dad
« Reply #1 on: May 26, 2017, 10:49:53 AM »
Bonds are not going to be safe once interest rates start rising.

sokoloff

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Re: Looking for Advise for Dad
« Reply #2 on: May 26, 2017, 11:03:45 AM »
My dad has settled a workers comp claim and is going to be left with around 100k after he pays off all of his liabilities (mortgage, car and credit cards).  He has a history of making poor financial decisions and is very risk adverse.  He is already on disability and can make ends meet on that monthly income once his home and car are paid off so the 100k will not be a lifeline.  The goal will be to spend it all during his life but to make it stretch as well.  He is 59 and not able to go back to work.

I was thinking maybe something like Vanguard Total Bond Market Index Fund (VBTLX) would be relatively safe.  Any thoughts?
IMO (and I am not a financial advisor), he needs to be in stocks. Given his basic needs are covered from an income stream, he can (and should, IMO) be 100% in equities (VTSAX) with this $100K.

OneCoolCat

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Re: Looking for Advise for Dad
« Reply #3 on: May 26, 2017, 11:21:10 AM »
My dad has settled a workers comp claim and is going to be left with around 100k after he pays off all of his liabilities (mortgage, car and credit cards).  He has a history of making poor financial decisions and is very risk adverse.  He is already on disability and can make ends meet on that monthly income once his home and car are paid off so the 100k will not be a lifeline.  The goal will be to spend it all during his life but to make it stretch as well.  He is 59 and not able to go back to work.

I was thinking maybe something like Vanguard Total Bond Market Index Fund (VBTLX) would be relatively safe.  Any thoughts?
IMO (and I am not a financial advisor), he needs to be in stocks. Given his basic needs are covered from an income stream, he can (and should, IMO) be 100% in equities (VTSAX) with this $100K.

I fear he would react poorly to a intermediate drop in share value.  He doesn't understand the basics of investing.  Perhaps a balanced fun with the lowest volatility would be best.

sokoloff

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Re: Looking for Advise for Dad
« Reply #4 on: May 26, 2017, 11:26:38 AM »
I fear he would react poorly to a intermediate drop in share value.  He doesn't understand the basics of investing.  Perhaps a balanced fun with the lowest volatility would be best.
Mathematically the best? No. Comfort-wise the best? Maybe, right up until it runs out of money.

Have a look over the tables in this article showing the performance of withdrawals from a portfolio composed of different amounts of stocks and bonds:
https://edrempel.com/reliably-maximize-retirement-income-4-rule-safe/

To me, for someone whose absolutely essential needs are met via a reliable income stream, this says to be 100% (or 90%) in equities and 0% (or 10%) in bonds.

mxt0133

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Re: Looking for Advise for Dad
« Reply #5 on: May 26, 2017, 11:27:33 AM »
The goal will be to spend it all during his life but to make it stretch as well.  He is 59 and not able to go back to work.

I was thinking maybe something like Vanguard Total Bond Market Index Fund (VBTLX) would be relatively safe.  Any thoughts?

Depending on his disability, people with disabilities tend to have a lower life expectancy.  So statistically he should claim Social Security as early as possible to maximize his benefits.

Based on his risk tolerance either put it in a Target retirement fund that is 60/40 bonds to stocks or if he is ultra conservative the Total Bond Market Index Fund.

To the poster that said bonds don't do well in a rising interest rate environment that is correct, but only if you sell before the bonds mature.  If you are going for yield then a bond fund with various maturities will be just fine.  But if they will be selling principal then a mix of stocks and bonds would probably be optimal.