I hope I am posting this in the right spot. If not, I apologize.
My brother-in-law is a very successful business executive, but does not have a financial background. He recommended my 71 year old mother gather up her investments, tax information, etc. and talk to the two men who manage his investments. I attended a meeting with them recently and listened as they recommended my mother, who has a bad run of luck with "advisors," liquidate the $400,000 she has in blue chip stocks (there is another 150k in an annuity and the rest is in tax managed bond funds for a total portfolio value of 650k) and invest the money in a select number of carefully selected individual bonds and bond funds -- no more stocks at all and just a small amount of cash.
They argued there's no point risking her portfolio for a 5-6% return when she could make 3% on bonds. They said that since these bonds are guaranteed to produce a certain amount of money for investors, she could depend on them, and not worry about losing money or the volatility of the market. They used GE corporate bonds and city municipal bonds as examples. When I asked them if they would invest their mother's money the same way, one of them flinched, while the other said yes. (Not that I take them at their word)
Given that she is worried about being too heavily invested in stocks (her portfolio is over 60% stock) and wants to preserve her money for future healthcare concerns, I understand wanting to decrease her stock holdings, but going ALL bonds? Is this nuts?
As you can tell, I myself am not a sophisticated investor who knows all the ins and outs of investing (I stick with a Total Bond/Total Stock/Total International portfolio), but this "go all bonds" pitch made me leery.
What do you all think?
Thank you in advance for your advice.