Mother's Retirement Portfolio/Fidelity ESG Funds

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Minty
Posts: 160
Joined: Sun Mar 24, 2013 3:19 pm
Location: NorCal

Mother's Retirement Portfolio/Fidelity ESG Funds

Post by Minty » Sun Sep 23, 2018 6:27 pm

My 78-year-old mother asked for help with her portfolio after I suggested that she ditch her AUM advisor who had her in relatively expensive funds. My mother has very little investment knowledge, but is adamant about owning only socially responsible funds, what Fidelity calls ESG for environmental, social, corporate governance. At the moment, she has no housing or car expenses because she lives with, and helps take care of, another relative, but if necessary, she could live with one of her children or we would assist her rent her own place if her income was tight. Nevertheless, it would be ideal if her nest egg would be available as long as possible. She is basically in good health for her age so hopefully there are a number of years ahead. There is no need or desire to leave a legacy. Here are the numbers:

Emergency funds: Three to six months of expenses in a credit union.
Debt: None.
Non-portfolio Income: Social Security only; $14K annually
Expenses: $29K annually
Tax Filing Status: Single
Tax Rate: 0% Federal, 0% State
State of Residence: California
Age: 78
Desired Asset allocation: 25% stocks / 75% Fixed Income
Desired International allocation: 20% of stocks

Current retirement assets:

Taxable: $300K in stock and bond mutual funds

IRA: $30K in stock mutual funds

New annual Contributions: $0

My sister and I, her only children, are on the same page about the following plan, which involves selling out her current positions, transferring the proceeds to Fidelity, and maintaining five years of expenses above Social Security income in CDs, but another pair of eyes would be great:

Proposed Portfolio:

$75K in 5 year CD ladder.

$66K Fidelity U.S. Sustainability Index Fund (FENSX), .11 ER
$16.5K Fidelity International Sustainability Index Fund (FNIYX), .2 ER
Remainder in Fidelity Sustainability Bond Index Fund (FNASX), .1 ER

Questions:

1. Does this portfolio have enough equities?
2. Given that she is in the 0% capital gains zone, are there any smart moves to consider?
3. How else can this plan be improved?

Thanks in advance!
Core Four with nominal bonds and TIPS.

ExitStageLeft
Posts: 895
Joined: Sat Jan 20, 2018 4:02 pm

Re: Mother's Retirement Portfolio/Fidelity ESG Funds

Post by ExitStageLeft » Mon Sep 24, 2018 9:52 am

I would be uncomfortable recommending less than 40% equities. The portfolio you are considering is 31% equities. Granted, your mother is older than someone just retiring, so there may not be as much risk from inflation.

At $15k per year, her portfolio is 22x expenses. That would likely sustain her as long as there are no significant medical or long term care expenses.

Minty
Posts: 160
Joined: Sun Mar 24, 2013 3:19 pm
Location: NorCal

Re: Mother's Retirement Portfolio/Fidelity ESG Funds

Post by Minty » Tue Sep 25, 2018 10:28 pm

Thanks. I think five years of expenses in CDs should give her room for something above 30% in equities, but I also want to be careful. Maybe I'll split the difference and suggest 35%.
Core Four with nominal bonds and TIPS.

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