nearly 60% in T. Rowe Price Spectrum Growth

Have a question about your personal investments? No matter how simple or complex, you can ask it here.

nearly 60% in T. Rowe Price Spectrum Growth

Postby ieee488 » Fri Jan 22, 2010 8:50 pm

My father died last year.

As it stands now, my mother gets SS and my father's pension, so she does not need income each month.

The issue is that almost 3/4 of her assets excluding the house are in stock mutual funds and nearly 60% of that is in T. Rowe Price Spectrum Growth Fund.

It looks like she is much too heavily weighted in stocks for a woman of 70. She is looking to do something with the Spectrum Growth.

Should my mom buy a bond fund?
If so, should she stay with T. Rowe Price? If so, which fund?
If not, which fund at Vanguard?

If not a bond fund. What?

Thank you in advance for your thoughts.
ieee488
 
Posts: 1504
Joined: Thu Dec 10, 2009 9:57 am

Postby Charleville » Fri Jan 22, 2010 11:47 pm

Check out TRow Price Spectrum Income. It is about 85% bonds and 15% stocks. It only lost about 9% in 2008.
Charleville
 
Posts: 116
Joined: Sat Jun 13, 2009 12:14 am
Location: Des Moines

Re: nearly 60% in T. Rowe Price Spectrum Growth

Postby tibbitts » Sat Jan 23, 2010 1:05 am

ieee488 wrote:My father died last year.

As it stands now, my mother gets SS and my father's pension, so she does not need income each month.

The issue is that almost 3/4 of her assets excluding the house are in stock mutual funds and nearly 60% of that is in T. Rowe Price Spectrum Growth Fund.

It looks like she is much too heavily weighted in stocks for a woman of 70. She is looking to do something with the Spectrum Growth.

Should my mom buy a bond fund?
If so, should she stay with T. Rowe Price? If so, which fund?
If not, which fund at Vanguard?

If not a bond fund. What?

Thank you in advance for your thoughts.

You don't say how much money is involved or whether it's a taxable account. You won't get as useful comments without providing that information.

Since the income doesn't seem to be needed, you can be more equity oriented than if it was. However, some people don't like seeing their balance fluctuate, even if they aren't spending it.

As a long-time Spectrum Growth shareholder, I can tell you that although it's a fund-of-funds, my impression is that TRP managers are more subject to "group think" than VG's outsourced managers are. So, when they win (as in recent years), they all tend to win. When they lose (as they did when I held the fund), they really take a beating.

However, you don't want to move a large sum of money and have it out of the market for even one day. So that's a logistical concern. I could hedge my move from TRP to VG because I had to cash to do that at the time, but I certainly couldn't now.

Paul
tibbitts
 
Posts: 4982
Joined: Tue Feb 27, 2007 7:50 pm

Postby dbr » Sat Jan 23, 2010 12:01 pm

Be sure when you say that she does not need income that you are considering the lifetime picture with inflation. If the pension is not COLA'd a time may come when the annuities are not able to supply needed income and you will have to plan how the portfolio will make up the difference.
dbr
 
Posts: 14323
Joined: Sun Mar 04, 2007 10:50 am

Re: nearly 60% in T. Rowe Price Spectrum Growth

Postby grabiner » Sat Jan 23, 2010 12:26 pm

ieee488 wrote:My father died last year.

As it stands now, my mother gets SS and my father's pension, so she does not need income each month.

The issue is that almost 3/4 of her assets excluding the house are in stock mutual funds and nearly 60% of that is in T. Rowe Price Spectrum Growth Fund.

It looks like she is much too heavily weighted in stocks for a woman of 70.


If she does not need the assets for income, then they are not invested for her immediate needs, but for her heirs, and the high weight to stocks may be reasonable. (However, if she may need the money in the future because the pension does not have a COLA or she has no long-term-care insurance, then part of the portfolio is for her use, and that part should be invested more conservatively.)
David Grabiner
User avatar
grabiner
Advisory Board
 
Posts: 13281
Joined: Wed Feb 21, 2007 12:58 am
Location: Columbia, MD

Postby ieee488 » Sat Jan 23, 2010 8:40 pm

Thank you for the responses.

I will take a look at Spectrum Income.


To answer the other questions posed,
1.) this money is in an IRA
2.) my father's pension has no COLA
3.) my mother has no long-term health care insurance

We are concerned that if she needs several years of nursing home care, we will need to tap into this money.

So, perhaps leave 1/2 in Spectrum Income and take 1/2 over to Vanguard?
ieee488
 
Posts: 1504
Joined: Thu Dec 10, 2009 9:57 am

Postby JW Nearly Retired » Sat Jan 23, 2010 10:12 pm

ieee488 wrote: As it stands now, my mother gets SS and my father's pension, so she does not need income each month.

You are aware that she has to start take RMDs from an IRA starting the year she is 70 1/2? Big penalties if she doesn't.
JW
JW Nearly Retired
 
Posts: 4055
Joined: Sun Dec 16, 2007 1:25 pm

Postby ieee488 » Sat Jan 23, 2010 10:47 pm

JW Nearly Retired wrote:
ieee488 wrote: As it stands now, my mother gets SS and my father's pension, so she does not need income each month.

You are aware that she has to start take RMDs from an IRA starting the year she is 70 1/2? Big penalties if she doesn't.
JW


Yes. We know that.
ieee488
 
Posts: 1504
Joined: Thu Dec 10, 2009 9:57 am

Postby dave.d » Sat Jan 23, 2010 11:53 pm

In a tax-protected account, if you are going to hold stocks, you can do a lot worse than TRP Spectrum Growth. You could do better by using low-cost index funds, but the most important thing will be to get the stock/bond allocation correct.

As I recall, Spectrum Growth and T. Rowe Price generally underperformed the market during the psychotic phase of the internet boom (~1999) and were widely scorned for being out-of-touch old fogies who didn't "get" the new internet economy. They had the last laugh in the years that followed.
User avatar
dave.d
 
Posts: 935
Joined: Mon Mar 19, 2007 11:30 pm
Location: Richmond, VA


Return to Investing - Help with Personal Investments

Who is online

Users browsing this forum: amarone, Bing [Bot], MasonStorm@TheBogleheadsF, RedDog14 and 54 guests