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Investment advice for a friend in her nineties

Posted: Sun Oct 07, 2018 10:05 pm
by John151
I’ve inadvertently become someone’s investment adviser. A dear friend who’s in her nineties calls me up and asks me if this is a good time to buy stocks. I always tell her that I don’t know where the stock market is heading, and that anyone who claims to know is either lying, stupid, or crazy. She also asks me how high interest rates are going to go, and I tell her I don’t know the answer to that one either.

I’ve sent her a copy of “The Bogleheads’ Guide to Investing,” but she says it’s too complicated for her to understand. I’ve told her what proportion of my savings I keep in stocks, but I’ve also told her that this proportion may not be reasonable for a woman her age. I’ve told her that my stock investments are in index funds, but she doesn’t understand index funds and wants nothing to do with them. I’ve recommended that she look into I Bonds through Treasury Direct, but she doesn’t feel comfortable investing online.

At this stage of her life, she’s obviously a candidate for bank CD’s, and that’s where she’s currently invested. But she says that she wants a greater return than CD’s currently provide.

Is there any other advice I could give her?

Re: Investment advice for a friend in her nineties

Posted: Sun Oct 07, 2018 10:07 pm
by Dottie57
John151 wrote: Sun Oct 07, 2018 10:05 pm I’ve inadvertently become someone’s investment adviser. A dear friend who’s in her nineties calls me up and asks me if this is a good time to buy stocks. I always tell her that I don’t know where the stock market is heading, and that anyone who claims to know is either lying, stupid, or crazy. She also asks me how high interest rates are going to go, and I tell her I don’t know the answer to that one either.

I’ve sent her a copy of “The Bogleheads’ Guide to Investing,” but she says it’s too complicated for her to understand. I’ve told her what proportion of my savings I keep in stocks, but I’ve also told her that this proportion may not be reasonable for a woman her age. I’ve told her that my stock investments are in index funds, but she doesn’t understand index funds and wants nothing to do with them. I’ve recommended that she look into I Bonds through Treasury Direct, but she doesn’t feel comfortable investing online.

At this stage of her life, she’s obviously a candidate for bank CD’s, and that’s where she’s currently invested. But she says that she wants a greater return than CD’s currently provide.

Is there any other advice I could give her?
Tell her to enjoy her money and to stop worrying about returns. Short term CDs are just fine. I expect rates will continue to rise for at least a bit.

She needs to realize the possibility of higher returns goes hand in hand with risk of losing money. Seriously CDs are good for her situation.

Re: Investment advice for a friend in her nineties

Posted: Sun Oct 07, 2018 10:20 pm
by make_a_better_world
I think it depends on what she plans to do with her assets at death, and I do not think that should be assumed. If she has grandchildren, for example, and plans to gift her assets to them, then I think it would be wise to invest the money into the longest time horizon portfolio just as for anyone else, with the caveat that you would want to select investments that could be transferred from her to them with the least tax liability. Stocks can be gifted at the value of the *original basis* even if gifted 20 years later provided they have never been sold. And she can gift them each a certain amount while she is still alive every year tax free. If she has no heirs and no wish to give to charity, however, then investing in stocks seems unproductive to me in any form given her age.

Re: Investment advice for a friend in her nineties

Posted: Sun Oct 07, 2018 11:14 pm
by 123
Does she do anything much online or does she have children that will help her with it. An easier alternative than CDs could be treasury bills or notes available through TreasuryDirect.gov

At her age I would likely steer her away from equity investments if she hasn't already "experienced" them.

Of course she could just be feeling you out for more information if she's currently using an investment adviser she has doubts about. Some of the oldsters are packing a load of assets but never let on.

Re: Investment advice for a friend in her nineties

Posted: Sun Oct 07, 2018 11:29 pm
by mhadden1
Dottie57 wrote: Sun Oct 07, 2018 10:07 pm She needs to realize the possibility of higher returns goes hand in hand with risk of losing money. Seriously CDs are good for her situation.
I agree about CDs. OP, maybe you could help your friend research the best brick-and-mortar bank rates in your area. Or, maybe she would be more comfortable with a non-local or on-line bank if she realizes it has FDIC coverage and that she can interact via phone or US mail.

Re: Investment advice for a friend in her nineties

Posted: Mon Oct 08, 2018 12:01 am
by Raymond
I think you've done all you can be reasonably expected to do.

If you make any further recommendations, and she acts on them, who do you think will be blamed (by her or by her relatives) if things go south afterwards?

Re: Investment advice for a friend in her nineties

Posted: Mon Oct 08, 2018 12:06 am
by inbox788
make_a_better_world wrote: Sun Oct 07, 2018 10:20 pm I think it depends on what she plans to do with her assets at death, and I do not think that should be assumed. If she has grandchildren, for example, and plans to gift her assets to them, then I think it would be wise to invest the money into the longest time horizon portfolio just as for anyone else, with the caveat that you would want to select investments that could be transferred from her to them with the least tax liability. Stocks can be gifted at the value of the *original basis* even if gifted 20 years later provided they have never been sold. And she can gift them each a certain amount while she is still alive every year tax free. If she has no heirs and no wish to give to charity, however, then investing in stocks seems unproductive to me in any form given her age.
The ideal AA for the grandchildren may be 90/10, but I'm not sure grandma will like a 30% drop in the market and her investments, even if they're meant for someone else. I wouldn't go further than 50/50 and more likely 40/60 or 30/70 if being aggressive at that age. (and nothing wrong with following the rules, 100-age or 120-age)

Without knowing the specific situation, I'd suggest CDs like others and that she spend or give away 5-10% a year (tax efficiently when possible).

Re: Investment advice for a friend in her nineties

Posted: Mon Oct 08, 2018 7:47 am
by moehoward
John151 wrote: Sun Oct 07, 2018 10:05 pm I’ve inadvertently become someone’s investment adviser. A dear friend who’s in her nineties calls me up and asks me if this is a good time to buy stocks. I always tell her that I don’t know where the stock market is heading, and that anyone who claims to know is either lying, stupid, or crazy. She also asks me how high interest rates are going to go, and I tell her I don’t know the answer to that one either.

I’ve sent her a copy of “The Bogleheads’ Guide to Investing,” but she says it’s too complicated for her to understand. I’ve told her what proportion of my savings I keep in stocks, but I’ve also told her that this proportion may not be reasonable for a woman her age. I’ve told her that my stock investments are in index funds, but she doesn’t understand index funds and wants nothing to do with them. I’ve recommended that she look into I Bonds through Treasury Direct, but she doesn’t feel comfortable investing online.

At this stage of her life, she’s obviously a candidate for bank CD’s, and that’s where she’s currently invested. But she says that she wants a greater return than CD’s currently provide.

Is there any other advice I could give her?
I would stay out of it. I hear this from older people (than me). Translated, I want complete safety but a better return.

Re: Investment advice for a friend in her nineties

Posted: Mon Oct 08, 2018 7:55 am
by Jack FFR1846
At her age, I'd think that ROI (return OF investment) would be of paramount importance. The chance to be scammed or put into inappropriate investments is quite high. Especially if she's out looking for a way to increase returns.

Bonds
CDs
There, I'm done.

Re: Investment advice for a friend in her nineties

Posted: Mon Oct 08, 2018 8:20 am
by Watty
One important thing is that she needs to understand the tax impact of any changes that she makes since selling something to put it into a better investment could trigger capital gains taxes.

If she has significant assets then she would be at risk of getting involved with some unsavory financial advisor who would take advantage of her so it would be good to warn her of that.

I think the best thing to do would be to talk with her about what her money is invested in now and if it is not terrible then to reassure her to that she is doing fine.

One critical things to have her look at is the beneficiaries of any retirement accounts and life insurance to make sure that they are up to date since these will take precedence over her will. If she has outlived her husband or kids or other people that have passed away then the beneficiary should be updated to be whoever she would want them to go to. She may also have new grandkids or great-grandkids that she would want to add as beneficiaries. If she has wills or trusts that have not been updated in 30 years then these should be updated too.

One pitfall to watch out for is that if by any chance she has a TSP (like a government 401k) that she inherited from her husband and she has left the funds in the TSP, then she should roll it out to an IRA to get better inheritance rules for whoever she leaves it to.

https://www.bogleheads.org/wiki/TSP_estate_planning

Re: Investment advice for a friend in her nineties

Posted: Mon Oct 08, 2018 8:38 am
by Shallowpockets
She is in her 90s. Where has her money been all this time? I hope when I am in my 90s I will have had all my ducks in a row for a long while.
Why is she calling you about this? Tell her to stand put with what she has and where she has it. She made it this far. What's to change?

Re: Investment advice for a friend in her nineties

Posted: Mon Oct 08, 2018 8:41 am
by SeekingAPlan
Where does this lady hold the bank CDs?

For example, I see a 1 year CD @ Chase is paying .02% in my area. If this is the rate the friend is getting it is not surprising that she wants to make a change. A local brick & mortar bank next door to Chase is offering 2.65% on a 17 month CD.

From my experience with these elders, they need more return but are not at all prepared to risk any of their money even if they say they are. Often they have an old relationship with the worst paying banks and just need to shop around locally to get something better.

Re: Investment advice for a friend in her nineties

Posted: Mon Oct 08, 2018 2:09 pm
by John151
Many thanks to all of you for your advice. I don’t want to advise my friend to buy stocks in her nineties, and her aversion to investing online pretty much rules out Treasury Direct and online banks. She’s also averse to money market mutual funds. So I’ve scouted around and have found two local banks that are paying a bit more than her current bank is paying, and I’ve offered to drive her to them. I’ve also told her that I wouldn’t feel comfortable doing more than that.

Re: Investment advice for a friend in her nineties

Posted: Mon Oct 08, 2018 4:43 pm
by Raymond
Sounds like a plan :happy

Re: Investment advice for a friend in her nineties

Posted: Mon Oct 08, 2018 4:50 pm
by JoeRetire
John151 wrote: Sun Oct 07, 2018 10:05 pmBut she says that she wants a greater return than CD’s currently provide.
Did she say why?

There's a huge difference if the reason is "I'm worried about running out of money" versus "I have plenty of money. I want to invest it to increase my legacy."

You might wish to help her find a fee-only fiduciary financial adviser.

Re: Investment advice for a friend in her nineties

Posted: Mon Oct 08, 2018 9:51 pm
by John151
Great suggestion! I have the impression that my friend is pretty well off. I think she’s just trying to squeeze the last nickel out of her investments, without really needing to.

Re: Investment advice for a friend in her nineties

Posted: Tue Oct 09, 2018 6:34 pm
by Artsdoctor
John151 wrote: Sun Oct 07, 2018 10:05 pm I’ve inadvertently become someone’s investment adviser. A dear friend who’s in her nineties calls me up and asks me if this is a good time to buy stocks. I always tell her that I don’t know where the stock market is heading, and that anyone who claims to know is either lying, stupid, or crazy. She also asks me how high interest rates are going to go, and I tell her I don’t know the answer to that one either.

I’ve sent her a copy of “The Bogleheads’ Guide to Investing,” but she says it’s too complicated for her to understand. I’ve told her what proportion of my savings I keep in stocks, but I’ve also told her that this proportion may not be reasonable for a woman her age. I’ve told her that my stock investments are in index funds, but she doesn’t understand index funds and wants nothing to do with them. I’ve recommended that she look into I Bonds through Treasury Direct, but she doesn’t feel comfortable investing online.

At this stage of her life, she’s obviously a candidate for bank CD’s, and that’s where she’s currently invested. But she says that she wants a greater return than CD’s currently provide.

Is there any other advice I could give her?
She clearly doesn't know what she's doing so it just depends on how much you want to do to protect her. Any seasoned investor will know that you can't predict the market, you can't predict interest rates, and by her own admission she doesn't know what an index fund is. She's not happy with CD rates NOW--but what has she been doing over the past decade when rates were far lower.

So many questions. Are there any signs of dementia? Does she have anyone who can look out for her (or, why is she asking you this now?)? Are her affairs in order (what about the way her bank accounts are titled, who are the beneficiaries, who's going to settle her estate)? Who's her power of attorney that can take care of her finances when she's not able to? It seems to me that, based on what you're written, that she's in a prime position to be taken advantage of, something that's been well-documented in the elderly over and over. If you'd like to be helpful, try to protect her from that and make sure she's taken the planning steps that any reasonable 90-s something will take.

Re: Investment advice for a friend in her nineties

Posted: Tue Oct 09, 2018 6:53 pm
by BarbBrooklyn
I'm with ArtsDoctor; it sounds like there is some cognitive decline going on.

Do you know if she's got one of her (trusted) kids signed up as POA? I participate in an ElderCare forum and we hear terrible stories of elders like this getting scammed out of their life savings.

Proceed with caution. Maybe accompany her to her bank and see that some responsible person there notates her account so that there are no shenanigans.

Re: Investment advice for a friend in her nineties

Posted: Tue Oct 09, 2018 7:36 pm
by Wakefield1
John151 wrote: Mon Oct 08, 2018 2:09 pm Many thanks to all of you for your advice. I don’t want to advise my friend to buy stocks in her nineties, and her aversion to investing online pretty much rules out Treasury Direct and online banks. She’s also averse to money market mutual funds. So I’ve scouted around and have found two local banks that are paying a bit more than her current bank is paying, and I’ve offered to drive her to them. I’ve also told her that I wouldn’t feel comfortable doing more than that.
Unfortunately there are still Big Banks that are rolling over CDs and locking in shamefully low interest rates
My mother has become essentially housebound,her Wells Fargo Two Year just rolled over at .2% :twisted: (Is this a form of Elder Abuse?)
a couple of years ago when she was riding in the car I tried to get her interested in starting an account at the Credit Union (she was eligible as I,a family member,have accounts there
A couple of weeks ago I was told that I can't open an account for her,she must be physically present even though I have a POA on her.

Re: Investment advice for a friend in her nineties

Posted: Tue Oct 09, 2018 8:25 pm
by John151
She’s a widow with two children who live out of state. I’ve encouraged her to talk to her children about her investments, since her children have a stake in what she does financially. One of her children isn’t at all interested. The other gave her a list of stocks to buy, most of which I’d never heard of, taken from a financial newsletter I’d never heard of. She promptly bought shares of each.

She lives in a retirement community, and I have to hope that the administrators and her doctor will notice and deal with any cognitive decline.

I’ve continued to tell her that I’ll be happy to drive her to banks offering more interest than she’s getting now. I don’t feel that I can do anything more than that.

Re: Investment advice for a friend in her nineties

Posted: Wed Oct 10, 2018 12:23 pm
by bigROI
How much money and what are her expenses, does she get SSI? Does she want to leave anything left over for relatives or charity? If it is not essential she could probably put in 10 - 20% into equities with little concern and set the rest up in CD ladders for funds as needed along with high return savings. This could give her the feeling that she is investing the market and not just watching it. She would have to have the temperament to keep the asset allocation to make it worth while and not just sell when things have dropped a bit.

Re: Investment advice for a friend in her nineties

Posted: Wed Oct 10, 2018 12:54 pm
by WhiteMaxima
Tell her the money he spend is the money she earned.

Re: Investment advice for a friend in her nineties

Posted: Wed Oct 10, 2018 1:39 pm
by John151
When she asks me if she should put more into stocks, I ask her how much she has in stocks already—not the dollar amount, just the percentage of her assets—and she’s vague about that, saying that she has “very little” or “not a lot" in stocks. I don’t know whether she thinks how much she has in stocks is her business and no one else’s, or whether she just doesn’t know.

I think that at some point her children will have to step in and manage her investments for her. In the meantime, I’ve been recommending fixed income investments, including bank CD’s. That’s all I think I can do.