I just found out that my 80 year old father has close to $200,000 in savings and checking accounts. He has no debt and retired from the military 30 or so years ago.
He isn't adverse to investing but doesn't want anything too risky. He'd also like to be able to use the money if he chooses to fund some travel.
I suggested Vanguard bond funds of some sort and he's mulling that idea over.
Better ideas?
I'm my father's conservator. He's 82 years old and has been living with Alzheimer's since 2008.
When I took over his finances in 2011, he was living on about half of his income (pension, Social Security, dividends). His asset allocation was 85% equities and 15% bonds. I cashed out the individual stocks and the most aggressive equity funds to get him to 50% cash, 35% equities, and 15% bonds. The cash gives him a buffer to pay for his long-term care expenses while the equities give him a reasonable amount of growth with a reasonable amount of risk.
If your father's response of "mulling that idea over" means "No thanks", then I'd suggest putting all $200K into a three-year CD ladder at NFCU or USAA. (He's eligible for membership in both.) That gives him over $65K each year to spend or roll over into another CD, and he doesn't have to worry about liquidity. If he's keeping his spending sprees under $30K then he could even build a seven-year CD ladder for 2.35% APY, but he'd feel stupid if interest rates spiked when he was only 2-3 years into that commitment.
If he's worried about inflation but doesn't want to take a risk of loss of principal then he could put most of the $200K into a Vanguard TIPS fund. However you could point out that his military pension and his Social Security income are already indexed to inflation, so if he wants to take more risk then he could easily invest in a short-term bond fund. If he truly doesn't need the money then he could invest in a passively-managed equity index dividend fund like the Dow ETF (ticker symbol DVY) but I don't think he has any reason to put up with this much principal risk for just a few more percentage points of return.
He's also effectively self-insured for long-term care expenses. If you two are getting along well with each other then it's time to have that discussion.
http://the-military-guide.com/the-pitfalls-of-your-parents-finances/