Help with Asset Allocation for Special Needs Adult

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monicafaye
Posts: 30
Joined: Thu Mar 18, 2010 8:39 am
Location: San Antonio, TX

Help with Asset Allocation for Special Needs Adult

Post by monicafaye »

Which AA would be best for an adult with intellectual disabilities who wants to learn about investing in order to become as independent as possible in the future? I believe he can master this with supervision.

70% VTWSX-Van. Total World Stock Index
30% VBMFX-Van. Total Bond Market Index

vs.

45% VTSMX-Van. Total Stock Market Index
25% VGTSX-Van. Total Intl Stock Index
30% VBMFX-Van. Total Bond Market Index

I know the first option would be simpler for him to manage and rebalance, but I don't know if Total World Stock Index is similar to the Total Stock Market Index and Total Intl Stock Index combined. Thanks for you opinions.
Laura
Posts: 7975
Joined: Mon Feb 19, 2007 6:40 pm

Target Retirement

Post by Laura »

May I suggest a Vanguard Target Retirement fund. This fund includes Total Stock Market, Total Intl Stock Market, and Total Bond Market. It automatically becomes more conservative over time and Vanguard maintains the asset allocation. It is a terrific one fund solution for everyone. Just start by selecting the fund with the asset allocation that most closely matches your target and then work to save as much money as possible.

It is best for tax advantaged accounts but would also work very well in a taxable account for the situation you describe.

One last point, if the person with intellectual disabilities receives government assistance make sure they do not have too many assets in their name. Assets from inheritance should go into a special needs trust rather than directly to the individual involved.

Laura
The views presented are my own and not necessarily those of the Department of State or the U.S. Government.
Ron
Posts: 6972
Joined: Fri Feb 23, 2007 6:46 pm
Location: Allentown–Bethlehem–Easton, PA-NJ Metropolitan Statistical Area

Post by Ron »

As parents of a special needs adult "child", and who have indeed created a SNT for his future, it is my opinion that all decisions related to investments do not necessarily fall within the realm of the person who needs assistance.

In our case, I make investment decisions. As per our estate, that decision will fall to a personal advisor (using the "prudent man" principals of investment), along with a defined commercial trust, to meet his financial needs after my wife/me pass.

I'm not saying that what you are doing is wrong (especially if it is related to a physical vs. a mental challenge, as we face) but just to let you know that there are alternatives to the situation.

Send me a PM, if you wish to discuss further. I do not wish to discuss on an open forum.

- Ron
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