Octogenarian father in law's idea of balance: AAPL + CASH

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buffetedbythewinds
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Octogenarian father in law's idea of balance: AAPL + CASH

Post by buffetedbythewinds » Wed Aug 15, 2018 2:29 pm

Hi—

Long time lurker first time poster. Thank you to all who have contributed to my education here, absolutely invaluable.
I'm writing about my mother and father in law's finances, which I am slowly taking over at their request.

FINANCIAL PICTURE
Savings
$425k in various super low interest checking / savings accounts

Investments at Fidelity (unlikely to change brokerages):
Rollover IRA: $675k of which
* 86.8% AAPL he's a lifelong Apple fanboy, bought $11,500 worth way back when, which is now $575k
* 5.5% FLPSX
* 5% FDRXX
* 1.4% FEQIX
* 0.8% FDIVX

Traditional IRA $23k
* 100% FDRXX

Fidelity Trust Under Agreement (?) $8k
* 100% FDRXX

Fidelity Charitable GIving Account $8k
* 100% Fidelity Investments Money Market Government Fund (basically cash)

So basically their allocation is APPLE + CASH. The big challenge is that he will NOT part with any of his Apple stock.

PERSONAL PROFILE
* No debt
* 3 properties, one of which is rental, worth $5-6 million total, all paid off.
* Married filing jointly, no dependents
* California residents
* age: he and wife both mid 80s, retired
* two children, married; two granddaughters, ages 4 and 8
* Insured to the gills - LTC Comprehensive, Umbrella, great UC system health insurance

Income / Expenses
average monthly income of $16k is Pension, SS, MRDs, rental income
average monthly expenses are about $13k
only take MRDs

so Risk Tolerance could be a bit higher than someone their age normally? given that they're not relying on the investments to live on? Granted 80% in one stock is about as risky as you can get!

GOALS
Given that he absolutely won't part with any of the AAPL (he is justly proud of the incredible returns), it's really hard to apply Boglehead principles. Given that their income / expenses means that their risk tolerance can afford to be a bit higher, should I just look to move some of the FDRXX into something like FSITX?

I plan on suggesting the following:
  • take $300k out of savings and front load 529 accounts for their granddaughters
  • keep $75K in emergency fund at Ally,
  • invest the remaining $50k in something conservative, given AAPL exposure. Maybe FINPX?
Appreciate your thoughts, and thank you in advance.
Last edited by buffetedbythewinds on Wed Aug 15, 2018 3:37 pm, edited 1 time in total.

daveydoo
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by daveydoo » Wed Aug 15, 2018 3:01 pm

buffetedbythewinds wrote:
Wed Aug 15, 2018 2:29 pm

Given that he absolutely won't part with any of the AAPL (he is justly proud of the incredible returns), it's really hard to apply Boglehead principles. Given that their income / expenses means that their risk tolerance can afford to be a bit higher, should I just look to move some of the FDRXX into something like FSITX?

I plan on suggesting the following:
  • take $300k out of savings and front load 529 accounts for their granddaughters
  • keep $75K in emergency fund at Ally,
  • invest the remaining $50k in something conservative, given AAPL exposure. Maybe FINPX?
Appreciate your thoughts, and thank you in advance.
Welcome! Better help will be along shortly.

You mention # of grandkids but not kids. So your financial plan for them is mostly to give money to your (?) kids for college? I don't see how that helps your FIL. The next two items you mention are so small that they barely merit comment. $50K conservatively invested will not offset the AAPL risk.

For a couple in their mid-80s, it's easy to envision at least one being around in a decade. At $100K/year for long-term care for just one, that nest egg that "looks" so big may not even be enough. Not sure what kind of insurance you're referring to in your post. Not sure if they own $100K properties of million-dollar properties.

I agree that the AAPL stuff is a real problem. I would be inclined to sell just enough each year that it doesn't bump me into a higher LTCG bracket. AAPL won't go to zero in their lifetimes but I could easily see it drop by 50 or 75%. And if he won't sell the AAPL or the rentals, then there is not a lot of actual money there if the need arises (see above).

The urgency of these issues depends somewhat on the health of the couple.
"I mean, it's one banana, Michael...what could it cost? Ten dollars?"

Broken Man 1999
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by Broken Man 1999 » Wed Aug 15, 2018 3:02 pm

When you take funds from savings for 529 plans, his percentage of AAPL is going to be even higher. :shock:

I would leave things alone, as the 529 plans do nothing for him. Obviously it helps you and the grandchildren, but I can't see how it helps him at all.

Instead of the 529 plans, why not give him some bonds to at least protect him from a market meltdown?

The portfolio needs to stay intact as there could be LTC needs in his or her future, IMHO.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

MiddleOfTheRoad
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by MiddleOfTheRoad » Wed Aug 15, 2018 3:07 pm

Their income exceeds their expenses. At their age, this is their play money, they don’t need it. Leave him alone. It may be very risky, but it may work out fine.

Dottie57
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by Dottie57 » Wed Aug 15, 2018 3:27 pm

As others have said, forget the 529s. FIL may need the money and it should be used for his careuntil death.

Suggest selling 10% of Apple. Suggest the next year. Maybe do Treasury notes or bills?

buffetedbythewinds
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by buffetedbythewinds » Wed Aug 15, 2018 3:34 pm

You mention # of grandkids but not kids.
sorry! Will edit post. 2 kids, both married with 1 daughter each.
Not sure if they own $100K properties of million-dollar properties.
2 are 2-3 million-dollar properties, one is a small vacation home worth $500k
I would leave things alone, as the 529 plans do nothing for him. Obviously it helps you and the grandchildren, but I can't see how it helps him at all.
Thanks. I think my thinking is that this money will eventually get inherited by his 2 kids (my sister and I), and we would benefit by not having to pay for our daughters' college educations. If we were to inherit today, we would be plowing the inheritance into 529s, so this a way of taking advantage of the a longer compounding timeline, no? In this sense it "helps" him him by being able to give more of his estate to his grandchildren than by just letting it sit there.
The portfolio needs to stay intact as there could be LTC needs in his or her future, IMHO.
At $100K/year for long-term care for just one, that nest egg that "looks" so big may not even be enough. Not sure what kind of insurance you're referring to in your post.
They have been paying LTC insurance premiums for years for CALPERS Comprehensive plan and that is taken into account for their monthly expenses. I'm assuming that would cover their needs, but maybe I need to reassess that?

My larger point was given that they don't currently NEED any income beyond SS, rental income and pension, combined with the LTC insurance and their other policies (large umbrella etc), I was imagining that it would take a pretty extraordinary disaster (a massive market correction timed with some disaster that their insurances couldn't cover) for them to suddenly need more, in which case they could move some money back from the 529s (and take the 10% hit on the gains).

In which case it felt like all that cash sitting there losing money could be better invested, partially by advancing some of the inheritance and skipping a generation (529s) and some bonds as Broken Man suggested.

bltn
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by bltn » Wed Aug 15, 2018 3:42 pm

Agree with not implementing 529 plans.
What kind of insurance does your f-i-l have? LTC expenses might be his biggest risk if he doewsn t have this insured.
With ghe rmd s, he ll have to start liqidating his Apple before long. Might as well do a little bit now.
At least move about 3/4 of his low interest savings into a cd ladder.
Good luck.

buffetedbythewinds
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by buffetedbythewinds » Wed Aug 15, 2018 4:04 pm

Thanks. Yeah CD Ladder is better than what they currently have. And you're right that the RMD will require liquidating some AAPL eventually. Maybe that will help him let go a little.

LTC insurance is CALPERS comprehensive which is pretty complete from what I understand.

I will say I'm surprised at all the anti-529 sentiments on here. From my understanding, Grandparent-funded 529s are great estate planning vehicles in that they

1) minimize the size of the estate, reducing taxes
2) all the usual 529 benefits of tax free growth if spend on ed
3) Grandparent contributions are not considered when applying for financial aid (but use it for the last year of college)

delamer
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by delamer » Wed Aug 15, 2018 4:19 pm

Is this your FIL, stepfather, or father? You talk about in-laws but then you said you and your sister are his kids.

In what way does he want you to take over their finances? Do you have any parameters other than not selling the stock?

The assets are very overweighted in one stock and real estate.

In fact, I’d argue that the real estate is the bigger problem. Would he consider getting rid of some of the real estate?

It seems to me that if he won’t sell the stock, then the real estate is the obvious solution to get the portfolio in better balance.

Regarding the 529s, you are talking about taking cash out of an already unbalanced portfolio to fund them. That is part of the problem. Also, you haven’t made it clear whether your parents want do this. They can do estate planning without taking that much of their liquid assets out of their estate now.

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Tamarind
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by Tamarind » Wed Aug 15, 2018 4:36 pm

How much income do they actually need from their savings to meet expenses, after the rental, SS, pension etc?

If $0 then it doesn't matter that he's all in AAPL. If AAPL crashed, it would just reduce his RMDs. If he became incapacitated, you'd sell the AAPL or the rentals or both and invest that money sanely and it would cover many years of LTC. While he is competent and does not need the money I don't see much for you to do.

Your taking over their finances sounds like it's just getting a POA set up so that you can make necessary changes after he is unable to, and protect them from scammers in the meantime.

I agree with those who are saying you should not be making moves to benefit children or grandchildren at this time.

buffetedbythewinds
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by buffetedbythewinds » Wed Aug 15, 2018 4:54 pm

Ok. Thanks Everyone for the comments. I’m going to re evaluate and discuss with them. Lots of food for thought here as always.

jminv
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by jminv » Wed Aug 15, 2018 5:01 pm

One way to hedge against his concentrated position in aapl is to buy long term puts (leaps) on aapl and roll over periodically. You could also do a collar which would essentially be costless while limiting his downside and upside. You would lock in his current gains, or at least over a range. It’s not difficult to do or you can have fidelity do it for you. He will get to keep his aapl stock.

buffetedbythewinds
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by buffetedbythewinds » Wed Aug 15, 2018 5:16 pm

Wow I don’t know what that means but I will research “leaps.” Thanks for the idea.

BarbK
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by BarbK » Wed Aug 15, 2018 5:21 pm

buffetedbythewinds wrote:
Wed Aug 15, 2018 4:04 pm
...
I will say I'm surprised at all the anti-529 sentiments on here. From my understanding, Grandparent-funded 529s are great estate planning vehicles in that they

1) minimize the size of the estate, reducing taxes
2) all the usual 529 benefits of tax free growth if spend on ed
3) Grandparent contributions are not considered when applying for financial aid (but use it for the last year of college)
Anti-529 sentiments could be because:
1. It's your idea, not his
2. You plan to deplete his after tax account of $425K by $300K. With 3 houses, future repairs totaling $125K is not unthinkable.
3. Not sure of your relationship, initially sounds like in-laws, but later you mentioned "I think my thinking is that this money will eventually get inherited by his 2 kids (my sister and I)".

Your plan seems self-serving which is even worse if you are an in-law vs their child.
Last edited by BarbK on Wed Aug 15, 2018 5:40 pm, edited 1 time in total.

Dottie57
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by Dottie57 » Wed Aug 15, 2018 5:23 pm

jminv wrote:
Wed Aug 15, 2018 5:01 pm
One way to hedge against his concentrated position in aapl is to buy long term puts (leaps) on aapl and roll over periodically. You could also do a collar which would essentially be costless while limiting his downside and upside. You would lock in his current gains, or at least over a range. It’s not difficult to do or you can have fidelity do it for you. He will get to keep his aapl stock.
:shock: :?

HereToLearn
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by HereToLearn » Wed Aug 15, 2018 5:27 pm

If they wish to continue in cash, you might just want to consolidate the various bank accounts at Fidelity where the MM pays 1.95%.

While you are having yourself added as POA on brokerage and bank accounts, you should also request a copy of the LTC plan contract and have yourself named there as the contact person. When reading the contract, you want to see how the carrier defines disability (often as being unable to complete two of five ADLs, but the contracts do vary). You also want to look at the elimination period and the daily benefit limit for in-home vs in-patient care as well as the benefit duration.

By the time your parents need to access LTC, you will want to be able to access their Medicare and retiree medical claims. Being added to these accounts now is much easier than being added in the middle of a health crisis.

ccf
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by ccf » Wed Aug 15, 2018 5:31 pm

buffetedbythewinds wrote:
Wed Aug 15, 2018 2:29 pm
which I am slowly taking over at their request.
Is there something they want you to change or some new goal? Or do they just not want to think about it anymore?

If it were me I guess I'd move bulk of the cash somewhere where it can pick up 2% interest and otherwise leave it alone. Maybe press a little and see if they'd be willing or interested in letting some property go in pursuit of simplification.

At 80 years old with these assets + pension and SS, they aren't in any danger, so if they like things the way that they are I don't think I'd try to change their minds.

stuper1
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by stuper1 » Wed Aug 15, 2018 5:52 pm

Looks to me like they may be in danger. Yearly expenses are $156k. How much is the RMD that they are taking? You say they are mid-80s and have about $700k in IRAs, so I'm thinking they may be taking $100k in RMDs each year. If that's correct, and AAPL goes down by 50%, their yearly income may go down by a third very quickly.

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celia
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by celia » Wed Aug 15, 2018 6:16 pm

At a minimum, I would stop re-investing AAPL dividends, if they currently have that set up and are agreeable. Use it instead to buy shares in a stock mutual fund and let him watch it grow so he can see that things other that AAPL can grow. Maybe first open the stock fund with $25K or so.

What is he taking out of the tIRA as RMDs? I'll bet the RMDs are increasing each year. Is he aware of QCDs in which the RMD (or part of it, or more than it) are given directly to qualified charities? This would make these IRA withdrawals be tax-free. I would start withdrawing AAPL from the tIRA in-kind and put it in taxable since it will not get a step-up in value in the IRA when he/ (your mom?) dies. By putting it in taxable, at least that part will eventually get a step-up. If the price of AAPL drops substantially, that will be a great time to withdraw some of it as the tax hit will be less. (Plant this seed in his mind now. During a bear market, people are focused on things other than saving taxes.)

Does your mom have any of these assets in her name? Does she agree with their AAPL allocation?
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.

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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by ralph124cf » Wed Aug 15, 2018 8:48 pm

jminv wrote:
Wed Aug 15, 2018 5:01 pm
One way to hedge against his concentrated position in aapl is to buy long term puts (leaps) on aapl and roll over periodically. You could also do a collar which would essentially be costless while limiting his downside and upside. You would lock in his current gains, or at least over a range. It’s not difficult to do or you can have fidelity do it for you. He will get to keep his aapl stock.
My understanding is that you cannot buy puts in an IRA.

Ralph

gotester2000
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by gotester2000 » Wed Aug 15, 2018 9:27 pm

Decide what to do when you inherit it. It is a diversified but unbalanced portfolio.
I hope he has utilized his wealth to his satisfaction till now.
If you are rich your heirs wont want you to live long. If you are not rich but have a sizeable monthly income through a pension/annuity, they will want to prolong your life/death.

randomguy
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by randomguy » Wed Aug 15, 2018 10:45 pm

stuper1 wrote:
Wed Aug 15, 2018 5:52 pm
Looks to me like they may be in danger. Yearly expenses are $156k. How much is the RMD that they are taking? You say they are mid-80s and have about $700k in IRAs, so I'm thinking they may be taking $100k in RMDs each year. If that's correct, and AAPL goes down by 50%, their yearly income may go down by a third very quickly.
The RMD should be in the 40-50k range

Right now Income is 16*12 = 192k
expenses are 13*12 = 156k

RMDs can pretty much go to zero and they will be fine. But the big things is that their investment portfolio doesn't matter. They have 5-6 million in real estate. They are set no matter what. Aaple goes to zero and their lifestyle doesn't have to change one bit.

msk
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by msk » Thu Aug 16, 2018 2:09 am

I suggest that you ask him for advice, and learn from your great FIL before he pops off :mrgreen:

jminv
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by jminv » Thu Aug 16, 2018 2:41 am

ralph124cf wrote:
Wed Aug 15, 2018 8:48 pm
jminv wrote:
Wed Aug 15, 2018 5:01 pm
One way to hedge against his concentrated position in aapl is to buy long term puts (leaps) on aapl and roll over periodically. You could also do a collar which would essentially be costless while limiting his downside and upside. You would lock in his current gains, or at least over a range. It’s not difficult to do or you can have fidelity do it for you. He will get to keep his aapl stock.
My understanding is that you cannot buy puts in an IRA.

Ralph
Yes, you can. In this case, the OP can do most any option strategy his father in law wants as long as he applies for option trading in the account, including buying AAPL puts or buying puts and selling calls, since he owns the underlying stock in the IRA.

What you can’t (generally) do in an IRA is sell naked calls or puts. This means you can’t buy puts or sells calls for which you don’t own an underlying position in the stock. You can do some naked (undefined risk) option strategiesin an ira held at tastyworks, though but that’s not really relevant here.

Hedging a single stock risk is a good strategy here since father in law will not part with it. If you want to get an idea of how this can work out well, look what Mark Cuban did when his company was bought out in the late 90s by yahoo but he was forced to hold onto the stock for a specified period. Had he not hedged (he did a collar), i don’t think we’d necessarily know of him now. If you buy puts, you have downside protection but at the cost of some degree of upside since you are paying for the puts. If you buy outs and sell calls you’re hedging it around a range so downside protection and giving up upside reward.

If OP is interested in this he should talk to an option specialist at Fidelity about it since he doesn’t seem to comfortable with it. Read up on it and then see what they’d recommend.

NotWhoYouThink
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by NotWhoYouThink » Thu Aug 16, 2018 7:07 am

If he's happy holding the Apple stock, and he has $425 in cash and $5-6M in real estate, I don't see much need to do anything with the AAPL. He is much more concentrated in real estate than in this single stock.

Make sure he's getting a decent interest rate on his cash, and try to consolidate accounts as much as possible so that it is easy to manage.

No idea what those Fidelity fund tickers are.

hightower
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by hightower » Thu Aug 16, 2018 7:15 am

buffetedbythewinds wrote:
Wed Aug 15, 2018 2:29 pm
Hi—

Long time lurker first time poster. Thank you to all who have contributed to my education here, absolutely invaluable.
I'm writing about my mother and father in law's finances, which I am slowly taking over at their request.

FINANCIAL PICTURE
Savings
$425k in various super low interest checking / savings accounts

Investments at Fidelity (unlikely to change brokerages):
Rollover IRA: $675k of which
* 86.8% AAPL he's a lifelong Apple fanboy, bought $11,500 worth way back when, which is now $575k
* 5.5% FLPSX
* 5% FDRXX
* 1.4% FEQIX
* 0.8% FDIVX

Traditional IRA $23k
* 100% FDRXX

Fidelity Trust Under Agreement (?) $8k
* 100% FDRXX

Fidelity Charitable GIving Account $8k
* 100% Fidelity Investments Money Market Government Fund (basically cash)

So basically their allocation is APPLE + CASH. The big challenge is that he will NOT part with any of his Apple stock.

PERSONAL PROFILE
* No debt
* 3 properties, one of which is rental, worth $5-6 million total, all paid off.
* Married filing jointly, no dependents
* California residents
* age: he and wife both mid 80s, retired
* two children, married; two granddaughters, ages 4 and 8
* Insured to the gills - LTC Comprehensive, Umbrella, great UC system health insurance

Income / Expenses
average monthly income of $16k is Pension, SS, MRDs, rental income
average monthly expenses are about $13k
only take MRDs

so Risk Tolerance could be a bit higher than someone their age normally? given that they're not relying on the investments to live on? Granted 80% in one stock is about as risky as you can get!

GOALS
Given that he absolutely won't part with any of the AAPL (he is justly proud of the incredible returns), it's really hard to apply Boglehead principles. Given that their income / expenses means that their risk tolerance can afford to be a bit higher, should I just look to move some of the FDRXX into something like FSITX?

I plan on suggesting the following:
  • take $300k out of savings and front load 529 accounts for their granddaughters
  • keep $75K in emergency fund at Ally,
  • invest the remaining $50k in something conservative, given AAPL exposure. Maybe FINPX?
Appreciate your thoughts, and thank you in advance.
Just curious what do they spend 13k/month on? Do they have large medical bills? Do they travel a lot? I mean, that's a lot of money to spend in someone that age who has a paid off house. Anyway, agree that the apple stock, though annoying to us, isn't that big of a deal really. He's far more concentrated in real estate, which is probably just as risky at this point. If it were me, I would try to unload 1 or two of those properties and use the proceeds to fund a conservative mix of total stock and total bond funds. Like 50/50 or something.

hdas
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by hdas » Thu Aug 16, 2018 7:47 am

Let the old man alone.
OP sounds like he shouldn’t be giving advice to anybody.
Stop it with puts. That’s naive and silly. Options are to be SOLD!!! If anything the old man can make some money selling covered calls regularly.

jj45
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by jj45 » Thu Aug 16, 2018 8:16 am

buffetedbythewinds wrote:
Wed Aug 15, 2018 2:29 pm
$425k in various super low interest checking / savings accounts

Rollover IRA: $675k of which
* 86.8% AAPL he's a lifelong Apple fanboy, bought $11,500 worth way back when, which is now $575k

So basically their allocation is APPLE + CASH. The big challenge is that he will NOT part with any of his Apple stock.

* 3 properties, one of which is rental, worth $5-6 million total, all paid off.
Their allocation is not APPLE + CASH. Most of their net worth is in real estate, around 85%. That is the real concentration. They have only 10% of their net worth in Apple, which is not terrible, particularly since their expenses are less than their income.

randomguy
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by randomguy » Thu Aug 16, 2018 9:30 am

jminv wrote:
Wed Aug 15, 2018 5:01 pm
One way to hedge against his concentrated position in aapl is to buy long term puts (leaps) on aapl and roll over periodically. You could also do a collar which would essentially be costless while limiting his downside and upside. You would lock in his current gains, or at least over a range. It’s not difficult to do or you can have fidelity do it for you. He will get to keep his aapl stock.
Yeah but what is the point? The money is in an IRA so he can just sell with no tax issues. You get the roughly same effect of limiting upside and downsides buy just selling stock.

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9-5 Suited
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by 9-5 Suited » Thu Aug 16, 2018 10:50 am

Seems like a solution without a problem. The guy is in his 80's with a net worth of about six million bucks. The AAPL is only 10% of his net worth. If it crashed and burned to nothing, he could sell a property and get millions of dollars of cash in his hand.

Why not just let it be? Moving from Apple to lower risk index funds won't likely make any difference to his life or his legacy. Boglehead philosophy isn't a religion to be practiced dutifully regardless of circumstance. Many roads to Dublin and all.

I'd recommend a completely different path also: don't recommend he sell any of his AAPL. Congratulate him and let him feel proud of what an amazing investment he made :) Don't tell him it was luck or that the past doesn't predict the future, etc. Let him be super proud about it!

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PalmQueen
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by PalmQueen » Thu Aug 16, 2018 11:23 am

9-5 Suited wrote:
Thu Aug 16, 2018 10:50 am
Seems like a solution without a problem. The guy is in his 80's with a net worth of about six million bucks. The AAPL is only 10% of his net worth. If it crashed and burned to nothing, he could sell a property and get millions of dollars of cash in his hand.

Why not just let it be? Moving from Apple to lower risk index funds won't likely make any difference to his life or his legacy. Boglehead philosophy isn't a religion to be practiced dutifully regardless of circumstance. Many roads to Dublin and all.

I'd recommend a completely different path also: don't recommend he sell any of his AAPL. Congratulate him and let him feel proud of what an amazing investment he made :) Don't tell him it was luck or that the past doesn't predict the future, etc. Let him be super proud about it!
+1+1+1

mortfree
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by mortfree » Thu Aug 16, 2018 11:39 am

AAPL is at 213.25 now... who needs advice?

AAPL equal Apple Stock symbol for those who don't speak ticker symbols.

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Kenkat
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by Kenkat » Thu Aug 16, 2018 11:50 am

The other major consideration here is that the Apple stock will receive a stepped up basis on death. That is a very substantial consideration given age and the capital gains he has realized.

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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by randomguy » Thu Aug 16, 2018 2:59 pm

Kenkat wrote:
Thu Aug 16, 2018 11:50 am
The other major consideration here is that the Apple stock will receive a stepped up basis on death. That is a very substantial consideration given age and the capital gains he has realized.
It is in an IRA. I don't think he gets a stepped up cost basis.

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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by Luke Duke » Thu Aug 16, 2018 3:50 pm

randomguy wrote:
Thu Aug 16, 2018 2:59 pm
Kenkat wrote:
Thu Aug 16, 2018 11:50 am
The other major consideration here is that the Apple stock will receive a stepped up basis on death. That is a very substantial consideration given age and the capital gains he has realized.
It is in an IRA. I don't think he gets a stepped up cost basis.
Correct
https://rodgers-associates.com/blog/tra ... er-assets/

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Kenkat
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Re: Octogenarian father in law's idea of balance: AAPL + CASH

Post by Kenkat » Thu Aug 16, 2018 6:37 pm

randomguy wrote:
Thu Aug 16, 2018 2:59 pm
Kenkat wrote:
Thu Aug 16, 2018 11:50 am
The other major consideration here is that the Apple stock will receive a stepped up basis on death. That is a very substantial consideration given age and the capital gains he has realized.
It is in an IRA. I don't think he gets a stepped up cost basis.
Oops, missed that! D’oh...

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