Author Topic: investment strategy for senior parent  (Read 1943 times)

dcunitedfan

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investment strategy for senior parent
« on: October 14, 2017, 07:53:11 AM »
I'm taking care of my 77yo mother - we recently sold her modest house, so she now lives with me.  Her SS takes care of her basic necessities (food, utilities, medigap insurance) with a few hundred a month left over.  She has about 100K in savings/IRA (in addition to being modest, was in need of renovation, plus she still had a mortgage at the time of sale, which is why the total now is low).

So in the short term she is completely fine, and we could leave all of the money in a savings account and not worry.  I'm wondering mostly about the future, if there is some uncovered medical expense or assisted living needed at some point.  I don't think it would be wise to chase some hyper aggressive strategy to try to quickly multiply her money several times over, which is probably what she would need if she ends up having greatly increased expenses later on.

So I guess my question is - should I tell her to keep to an age appropriate, conservative strategy and have her leave most of her money in fixed income, or should she be doing something else?

Frankies Girl

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Re: investment strategy for senior parent
« Reply #1 on: October 14, 2017, 09:48:44 AM »
If you want ridiculously simple, you could put everything into either Vanguard's Wellesley Income (VWINX) or Wellington (VWELX).

Wellesley is a balanced fund mix, and the most conservative of the two with 1/3 in stocks and 2/3 in bonds. It will throw off some decent dividends each month (the income part) that could be reinvested if not needed. 

Wellington is also a balanced fund mix, but skewed the other direction; 1/3 bonds and 2/3 stocks. So still conservative, but better growth opportunities.

Do also consider if any of the invested funds are in a taxable account, or IRA required minimum distributions (which she will have to take each year) may push her up into a higher income bracket. As she is single, her social security and distributions all will have impact her taxes. So investing heavily in bonds will add to her income through the dividends/cap gains generated.


If you can't decide, an equal mix of Wellington and Wellesley will give you 50% equities and 50% investment grade intermediate bonds. I personally would choose one or the other and go 100% into that since it's so easy and it's Vanguard so you know they are excellent funds - just have to decide very conservative (Wellesley) or reasonably conservative (Wellington) basically.

Both are considered the gold standard (and highly recommended) for conservative portfolios (so will weather downturns as well as anything) while still providing a bit of growth.



You could recreate the above if for some reason you'd prefer using Vanguard's VTSAX and VBTLX (both of these are their all encompassing index funds) to create a 60/40 or 70/30 2-fund portfolio.

Vanguard Total Stock Market Index Fund (VTSAX)
Vanguard Total Bond Market Index Fund (VBTLX)

« Last Edit: October 14, 2017, 09:52:00 AM by Frankies Girl »

dcunitedfan

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Re: investment strategy for senior parent
« Reply #2 on: October 15, 2017, 07:05:59 AM »
Thanks - I was asking more for big picture, should I be looking for an age-appropriate (conservative) allocation, or should I try to be more aggressive?  There is little current need for income in the traditional sense, since SS takes care of their current needs.  It's more looking ahead to a potential longer term need that, if it happens, would likely exhaust their current modest savings.  I think the odds of achieving that investment goal are remote at best, so I tend to think we shouldn't risk it.

TomTX

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Re: investment strategy for senior parent
« Reply #3 on: October 15, 2017, 08:18:49 AM »
Thanks - I was asking more for big picture, should I be looking for an age-appropriate (conservative) allocation, or should I try to be more aggressive?  There is little current need for income in the traditional sense, since SS takes care of their current needs.  It's more looking ahead to a potential longer term need that, if it happens, would likely exhaust their current modest savings.  I think the odds of achieving that investment goal are remote at best, so I tend to think we shouldn't risk it.

In the short term, having more bonds is safer (less chance of a stock crash taking a big chunk of the portfolio when you need it)

In the long term, having more stocks is safer (less chance of inflation eating away the value of your investments)

talltexan

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Re: investment strategy for senior parent
« Reply #4 on: October 16, 2017, 07:29:30 AM »
A 77-year-old is still quite young, should be planning for 13 years (or more)!

DrF

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Re: investment strategy for senior parent
« Reply #5 on: October 16, 2017, 07:39:13 AM »
If she can cover her costs with SS, and she has a decent safety net (you/other family). I feel she should go 100% stocks.

Say she goes another 10+ years before needing any nursing/assisted living help. If you are too conservative, she could have not much more in 10 years than she does now. If you invest 100% in equity, you would likely double what she has now.

With the amount she has now, you really need to think to yourself that in 10-15 years YOU will be paying the majority of your mom's medical/living expenses. Given that, if you had ~$100k right now, would you put it into bonds, a balanced fund, or 100% stocks?

talltexan

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Re: investment strategy for senior parent
« Reply #6 on: October 16, 2017, 02:48:39 PM »
I could not imagine doing what DrF is describing...it creates the possibility (some possibility) of having to look your mother in the face three years from now with that nest egg worth 60% of what it's worth today.

dcunitedfan

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Re: investment strategy for senior parent
« Reply #7 on: October 22, 2017, 07:49:10 AM »
These last 2 are basically the options I've been pondering.  I don't want to be in the position of seeing a big loss, and am not comfortable with the sort of risk that would come with trying for a big win, so I'll probably go an age-appropriate route.  Thanks for the input.

Zamboni

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Re: investment strategy for senior parent
« Reply #8 on: October 22, 2017, 01:05:34 PM »
If she's up for it, then you might want to have your Mom take the risk tolerance quiz on Vanguard. If that indicates she should stay conservative, then stay conservative. But maybe she will surprise you?

https://personal.vanguard.com/us/FundsInvQuestionnaire