Retirement investing help...please

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beeej
Posts: 4
Joined: Wed Aug 08, 2018 12:27 pm

Retirement investing help...please

Post by beeej » Fri Sep 21, 2018 12:10 pm

HI I am new to the board and looking for a little help if possible.

My mother is 68, market phobic and has me in charge of her nest egg. She has $150,000 cash in a 1.85% savings account (Ally bank.) She also has $310,000 I recently pulled from Edward Jones and moved to Schwab. My Schwab guy is suggesting Thomas Partners and SIP.

My intention based on reading here is to invest in index funds. The three fund approach or possibly two.

The question is : with so much of her nest egg in cash that she isn't comfortable putting in the market how do I allocate the $310,000 in the market. The typical 60-40 split will leave her with too little return, I think. She currently pulls 5% off the nest egg. I am continually suggesting living off the cash and leaving the $310,000 alone but this isn't happening anytime soon.

Am I correct in looking at the nest egg as a $460,000 whole and in doing so say she already has the 30% bond/cash covered??? How does the board suggest I allocate the $310,000 to get some return while preserving the nest egg??? Any feedback is much appreciated. I feel way more pressure looking after her money than I do my own.

My mom lives very conservatively no house payment or car payment no consumer debt just typical utilities and cable etc. She does receive social security though I don't have that number as I type this.

PFInterest
Posts: 2684
Joined: Sun Jan 08, 2017 12:25 pm

Re: Retirement investing help...please

Post by PFInterest » Fri Sep 21, 2018 1:08 pm

beeej wrote:
Fri Sep 21, 2018 12:10 pm
HI I am new to the board and looking for a little help if possible.

My mother is 68, market phobic and has me in charge of her nest egg. She has $150,000 cash in a 1.85% savings account (Ally bank.) She also has $310,000 I recently pulled from Edward Jones and moved to Schwab. My Schwab guy is suggesting Thomas Partners and SIP.

My intention based on reading here is to invest in index funds. The three fund approach or possibly two.

The question is : with so much of her nest egg in cash that she isn't comfortable putting in the market how do I allocate the $310,000 in the market. The typical 60-40 split will leave her with too little return, I think. She currently pulls 5% off the nest egg. I am continually suggesting living off the cash and leaving the $310,000 alone but this isn't happening anytime soon.

Am I correct in looking at the nest egg as a $460,000 whole and in doing so say she already has the 30% bond/cash covered??? How does the board suggest I allocate the $310,000 to get some return while preserving the nest egg??? Any feedback is much appreciated. I feel way more pressure looking after her money than I do my own.

My mom lives very conservatively no house payment or car payment no consumer debt just typical utilities and cable etc. She does receive social security though I don't have that number as I type this.
first why is 60:40 too little return?
second shes spending 5% of the portfolio on top of her SS? what are the actual numbers?

delamer
Posts: 6398
Joined: Tue Feb 08, 2011 6:13 pm

Re: Retirement investing help...please

Post by delamer » Fri Sep 21, 2018 1:25 pm

Good for for you for getting her way from EJ.

Is she withdrawing 5% of the assets now at Schwab or is she withdrawing 5% of the total $460,000?

If she is market phobic, then her comfort level with stocks is the most important factor in determining her stock allocation.

You could suggest a fund-of-funds option like the Vanguard LifeStrategy Conservative Growth Fund: https://investor.vanguard.com/mutual-fu ... rview/0724

The advantage of using one of these is that it makes it harder for someone who is jittery about the markets to sell their equity holdings after a correction/crash, relative to separate stock and bond funds. Plus, psychologically, a negative return in stocks is likely to be somewhat disguised by increases (or smaller negatives) in bonds which means less panicking.

beeej
Posts: 4
Joined: Wed Aug 08, 2018 12:27 pm

Re: Retirement investing help...please

Post by beeej » Fri Sep 21, 2018 1:36 pm

PFInterest wrote:
Fri Sep 21, 2018 1:08 pm
beeej wrote:
Fri Sep 21, 2018 12:10 pm
HI I am new to the board and looking for a little help if possible.

My mother is 68, market phobic and has me in charge of her nest egg. She has $150,000 cash in a 1.85% savings account (Ally bank.) She also has $310,000 I recently pulled from Edward Jones and moved to Schwab. My Schwab guy is suggesting Thomas Partners and SIP.

My intention based on reading here is to invest in index funds. The three fund approach or possibly two.

The question is : with so much of her nest egg in cash that she isn't comfortable putting in the market how do I allocate the $310,000 in the market. The typical 60-40 split will leave her with too little return, I think. She currently pulls 5% off the nest egg. I am continually suggesting living off the cash and leaving the $310,000 alone but this isn't happening anytime soon.

Am I correct in looking at the nest egg as a $460,000 whole and in doing so say she already has the 30% bond/cash covered??? How does the board suggest I allocate the $310,000 to get some return while preserving the nest egg??? Any feedback is much appreciated. I feel way more pressure looking after her money than I do my own.

My mom lives very conservatively no house payment or car payment no consumer debt just typical utilities and cable etc. She does receive social security though I don't have that number as I type this.
first why is 60:40 too little return?
second shes spending 5% of the portfolio on top of her SS? what are the actual numbers?
I am not necessarily saying the 60-40 is too little return. I am saying that if the $150,000 stays in cash and 40% of the $310,000 goes to bonds or equivalents then 60% in stocks would be $186,000 roughly or 40% of nest egg. I don't assume to be right, that's why I am asking for help.

beeej
Posts: 4
Joined: Wed Aug 08, 2018 12:27 pm

Re: Retirement investing help...please

Post by beeej » Fri Sep 21, 2018 1:43 pm

delamer wrote:
Fri Sep 21, 2018 1:25 pm
Good for for you for getting her way from EJ.

Is she withdrawing 5% of the assets now at Schwab or is she withdrawing 5% of the total $460,000?

If she is market phobic, then her comfort level with stocks is the most important factor in determining her stock allocation.

You could suggest a fund-of-funds option like the Vanguard LifeStrategy Conservative Growth Fund: https://investor.vanguard.com/mutual-fu ... rview/0724

The advantage of using one of these is that it makes it harder for someone who is jittery about the markets to sell their equity holdings after a correction/crash, relative to separate stock and bond funds. Plus, psychologically, a negative return in stocks is likely to be somewhat disguised by increases (or smaller negatives) in bonds which means less panicking.
Thank you for the suggestion. Getting her to leave Jones was not fun. I just went and looked at the Vanguard Life strategy funds and the cost to get in them even from Schwab looks cheap?? Would you consider Life Strategy moderate growth fund for her considering her cash positionor stick to conservative growth fund? This looks very attractive to me. How would you compare this to a stock and bond index fund strategy? Thanks again for your time and response.

delamer
Posts: 6398
Joined: Tue Feb 08, 2011 6:13 pm

Re: Retirement investing help...please

Post by delamer » Fri Sep 21, 2018 1:57 pm

beeej wrote:
Fri Sep 21, 2018 1:43 pm
delamer wrote:
Fri Sep 21, 2018 1:25 pm
Good for for you for getting her way from EJ.

Is she withdrawing 5% of the assets now at Schwab or is she withdrawing 5% of the total $460,000?

If she is market phobic, then her comfort level with stocks is the most important factor in determining her stock allocation.

You could suggest a fund-of-funds option like the Vanguard LifeStrategy Conservative Growth Fund: https://investor.vanguard.com/mutual-fu ... rview/0724

The advantage of using one of these is that it makes it harder for someone who is jittery about the markets to sell their equity holdings after a correction/crash, relative to separate stock and bond funds. Plus, psychologically, a negative return in stocks is likely to be somewhat disguised by increases (or smaller negatives) in bonds which means less panicking.
Thank you for the suggestion. Getting her to leave Jones was not fun. I just went and looked at the Vanguard Life strategy funds and the cost to get in them even from Schwab looks cheap?? Would you consider Life Strategy moderate growth fund for her considering her cash positionor stick to conservative growth fund? This looks very attractive to me. How would you compare this to a stock and bond index fund strategy? Thanks again for your time and response.
The LifeStrategy underlying funds are stock and bond index funds. That’s the appeal.

I’d want an overall 30% to 40% stock allocation at your mother’s age, at least. I’d count $50,000 or so of the cash as a separate emergency fund and the remaining $100,000 as part of her investment portfolio.

You said she is market phobic, and that has to be balanced with the need for some growth.

jayhawkerbeef
Posts: 246
Joined: Tue Jul 22, 2014 11:10 am

Re: Retirement investing help...please

Post by jayhawkerbeef » Fri Sep 21, 2018 2:13 pm

Similar situation. Only all cash. The SSI and pension monthly are break even pretty much with living expenses. My fear, probably looking at nursing home sooner or later. Can’t risk it.

beeej
Posts: 4
Joined: Wed Aug 08, 2018 12:27 pm

Re: Retirement investing help...please

Post by beeej » Fri Sep 21, 2018 2:22 pm

delamer wrote:
Fri Sep 21, 2018 1:57 pm
beeej wrote:
Fri Sep 21, 2018 1:43 pm
delamer wrote:
Fri Sep 21, 2018 1:25 pm
Good for for you for getting her way from EJ.

Is she withdrawing 5% of the assets now at Schwab or is she withdrawing 5% of the total $460,000?

If she is market phobic, then her comfort level with stocks is the most important factor in determining her stock allocation.

You could suggest a fund-of-funds option like the Vanguard LifeStrategy Conservative Growth Fund: https://investor.vanguard.com/mutual-fu ... rview/0724

The advantage of using one of these is that it makes it harder for someone who is jittery about the markets to sell their equity holdings after a correction/crash, relative to separate stock and bond funds. Plus, psychologically, a negative return in stocks is likely to be somewhat disguised by increases (or smaller negatives) in bonds which means less panicking.
Thank you for the suggestion. Getting her to leave Jones was not fun. I just went and looked at the Vanguard Life strategy funds and the cost to get in them even from Schwab looks cheap?? Would you consider Life Strategy moderate growth fund for her considering her cash positionor stick to conservative growth fund? This looks very attractive to me. How would you compare this to a stock and bond index fund strategy? Thanks again for your time and response.
The LifeStrategy underlying funds are stock and bond index funds. That’s the appeal.

I’d want an overall 30% to 40% stock allocation at your mother’s age, at least. I’d count $50,000 or so of the cash as a separate emergency fund and the remaining $100,000 as part of her investment portfolio.

You said she is market phobic, and that has to be balanced with the need for some growth.
Extremely helpful! Thank you I appreciate it. My mom's accounts were being fee soaked for 12 years so I keep telling myself that even if my plan isn't perfect it will be better but your suggestion makes a lot of sense for her situation and my peace of mind.

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