Author Topic: Help with my mom's investments!  (Read 1538 times)

Miss Prim

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Help with my mom's investments!
« on: November 27, 2017, 02:40:19 PM »
Hi all.  Haven't been on in awhile.  I have a question I hope someone can help with.  My mom sold her house and is living by me in an independent senior living center.  She wants to invest some of her money to earn a little bit of return, but does not want anything risky.  She does not have a lot, but should be able to live for quite a few years in this situation.  She recently contacted a bank and the Financial consultant had 2 recommendations.  I'll see if I can decipher his chicken scratches!  His first idea was 3 CD's.  One 13 month at 1.5%, one 19 month at 1.75% and one 25 month as 1.85%.  The next idea it looks like was Pimco, 1/2 investment grade bond with 2.5% dividends and 1/2 income fund at 4.25% dividend.  Then he goes on to write blended yield=3.38%, anticipated 1 % growth, target return 4-4.5% /year.  C share- no fee to buy if held 1 year, no fee to sell, if held less than 1 year-1% fee to sell. 
I am supposed to meet with this guy soon and she has been bugging me.  This is not all the money she has, only part of it that she is not sure what to do with.  The rest is invested with another bank and I think it is invested alright. 

I have to preface this by saying that I have my own investments that are mostly in vanguard, fidelity and then a bunch of stocks that my husband inherited that were invested by his brother who was an investment banker, so my portfolio is doing great, but I am at a loss as to what to recommend to my mother.  Also, I just don't have the time to really do any research and if I invest her money and it loses money as of course the market cycles, she will not be happy with me.  I would prefer she have someone else do her investing.  As far as she knows, there is no fee for this, but I will ask when I see the consultant. 

She is 86 and in pretty good shape.  She is independent but can get extra help at this facility if she needs it.  She would probably have enough money even if it doesn't earn anything to last a year in a nursing home, but then would probably be on Medicaid at that point. 

Thanks for your time!  Miss Prim


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Re: Help with my mom's investments!
« Reply #1 on: November 27, 2017, 05:36:19 PM »
...does not want anything risky.

...if I invest her money and it loses money as of course the market cycles, she will not be happy with me. 
Depends on the definition of "risky" and "loses money".  If she will be unhappy with the loss of even $1, then CDs may be the best bet.

If she could tolerate "a little" volatility, something like the Vanguard LifeStrategy Income Fund (20/80 stock/bond) could be appropriate.

Car Jack

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Re: Help with my mom's investments!
« Reply #2 on: November 28, 2017, 07:15:52 AM »
Of all the Jack Bogle principals, you should look here to "Simplify".

This adviser is defining a traditional CD ladder and then it sounds like perhaps dividend stocks or some kind of insurance plan or something. 

She needs none of this.  She can put 4 years worth of spending in an Ally high yield account and the rest in an Ally 5 year CD.  Simple and done.  If she has a local brick and mortar bank, simply link it to Ally and she can get the money ACH'd over in a business day.

All of these laddered CDs are going to get her a couple basis points and become overly complex for no reason.  Plus, the adviser isn't doing this out of the goodness of his heart, so we know who is paying him somehow.....your mom.  Screw that. 


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Re: Help with my mom's investments!
« Reply #3 on: November 28, 2017, 09:24:17 AM »
I helped my mom invest her money a few years back. She's very risk-averse, but she's only 70 so she needs a little growth to hopefully outpace inflation. I settled on a 75/25 mix of a decent bond fund (PBDIX) and an S&P500 Index fund. She's been happy with the modest returns so far, and hopefully won't freak out during the next (inevitable) dip. The bond fund should prevent too much panic.

Frankies Girl

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Re: Help with my mom's investments!
« Reply #4 on: November 28, 2017, 09:49:39 AM »
As she is wanting safest possible, and she might blame you if the market does what it does, I honestly wouldn't make any suggestions to her unless she understood that any suggestions were made with as much thought as possible, but you are not a clairvoyant and the market does sometimes go down... so on that note, I'd go with the CD ladder suggested by the adviser.

If she is capable of being reasonable, then I'd look at Vanguard's Wellington or Wellesley funds. But for one very conservative, the Wellesley is the best for her situation. These are both managed funds, but are super low ERs considering and of course, Vanguard.

Both funds are balanced funds, containing both stocks and bonds. The Vanguard Wellington Fund has a moderate allocation and is tilted towards stocks, with roughly 2/3 in stocks and 1/3 in bonds. The Vanguard Wellesley Income Fund has a conservative allocation and is tilted towards bonds, with roughly 2/3 in bonds and 1/3 in stocks. Both funds maintain a Morningstar Analyst Rating of Gold and have five star ratings across the board. Part of the secret to their success, beyond good management and a focus on value, is low expenses. Wellington has an expense ratio of 0.25% for the investor shares and 0.16% for the admiral shares, while Wellesley Income has expenses of 0.22% for the investor shares and 0.15% for the admiral shares. That is cheaper than some other firm's index funds.

Miss Prim

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Re: Help with my mom's investments!
« Reply #5 on: November 28, 2017, 01:28:10 PM »
Thank you all for your replies!  I have read all the replies and I think I will suggest she just invest it in CD's, but I think I will look into the Ally bank CD's.  I think I will have her bypass the bank and try to do it for her online with Ally. 

While I'm at it, I will try to look at all of her other investments and see how they are doing.  She doesn't have a lot, but enough to pay for her apartment for a number of years and than a nursing home for long enough to get in a good one before she would be on Medicaid if it comes to that.   

                                                               Miss Prim