Where put cash for 96-year-old folks?

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Topic Author
bfeenix44
Posts: 103
Joined: Thu Dec 26, 2019 8:05 pm

Where put cash for 96-year-old folks?

Post by bfeenix44 »

In a previous thread I asked advice on folks' Ed Jones portfolio, and after much consideration of that advice we have decided keeping it "as is" is the best decision for us currently. I do plan on taking things out as they mature (i.e. CDs, Muni bonds), and may open a Vanguard account for them as those assets mature.

QUESTION
My question today is what do I do with their cash right now? I've been reading various threads about peoples' opinions on CDs vs. HY Savings vs. Short Term TIPS...etc. It's confusing for me to decide this, but our local banks are offering best .75%. Currently there is $50-$100K I would like to put into something. And I'm trying to organize the cash that's in CDs into a quarterly rolling ladder (is that the right terminology or did I just make that up?)

The portfolio info is below -- what would you do with cash in this situation?

Thanks!
Tamara


b]CURRENT SITUATION[/b]:
My folks are in their mid-90s, and I am now responsible for their physical and financial affairs. They are still in their own home, and I live with them currently as my dad has severe hearing and vision loss, a permanent catheter, and is quite frail. Between mom and I and Home Health Care we are managing but his short-term memory is now going (long term seems better), and he's no longer able to "do his bookwork" as he's done his entire life. I handle things for them much the same as he has in the past, and discuss it with him as he enjoys feeling included. My mom has never handled finances and is very uncomfortable doing so; I include her in the discussions, as well, as she says she likes to learn, but doesn't want to be hands-on. I have one older sister (5 hours away; we have a great relationship) but she chooses to let an advisor handle her portfolio, and has much the same mind-set as my mom.

PROFILE:
Emergency funds: 8 years
Debt: None
Tax Filing Status: Married, Jointly
Tax Rate: 12% Federal, 4.1% State
State of Residence: Iowa
Age: Dad 96 / Mom 95
Size of current total portfolio: Low 7 figures

Current / Desired Asset allocation:
Farmland is included on bond side.
"Desired Allocation" = I feel we're in the ballpark OK with 20/80 at their age, but I welcome suggestions.

General financial additional notes:
My folks own part of a small Iowa farm (we have a very solid, young tenant farmer), and they have adequate insurance (Medicare, Supplement and Prescription, Long Term Care). Home is paid off, and we live quite frugally in a very rural environment. There are wills, living wills, medical directives, etc. in place and I have Power of Attorney.

Folks' annual expenses are completely covered by their non-investment income (SS, IPERS pension, VA compensation, farm cash rent). They probably have at least $30K - $40K leftover at the end of the year, which may be considered for investment. My understanding is that no capital gains taxes are paid in their tax bracket.

----------------------------------------------------------------------------
PORTFOLIO:
49.69% Land
42.11% Ed Jones, taxable (see below)
3.00% Annuities (2)
2.61% Cash for investing now
2.59% II / E Bonds
---------
100%
----------------------------------------------------------------------------
ED JONES 42.11% DETAILS:

xx% Edward Jones - CDs
0.78% Morgan Stanley Bk N A Salt Lake City Utah
0.79% Wells Fargo Bank NA
1.91% Discover Bank
1.58% Morgan Stanley Bk N A Salt Lake City Utah

xx% Edward Jones - Municipal Bonds
0.55% CUSIP: 83703FEM0 Bond Rating: AA/WD
South Carolina Jobs Econ Dev Hosp Rev Rfdg Palmetto Hlth

0.27% CUSIP: 880461BF4 Bond Rating: AA+/Aa1
Tennessee Housing Dev Agency Residential Fin Prog Revenue B

1.04% CUSIP: 46257TDT3 Bond Rating: AA/Aa2
Iowa State Special Oblig Ijobs Pg Series A Revenue

1.65% CUSIP: 90343SAV7 Bond Rating: AA/Aa3
Usf Financing Corp Florida Capital Improvement Revenue

1.56% CUSIP: 259230MV9 Bond Rating: AA-/AA-
Douglas Cnty NE Hosp Auth No 2 Hlth Facs Nebraska Medicine

1.09% CUSIP: 432299AT2 Bond Rating: AA+/Aa1/AA+
Hillsborough Cnty Florida Communications Svcs Tax Rev

xx% Edward Jones - Corporate Bond
0.51% CUSIP: 74432AH78 Bond Rating: A/A3
Prudential Financial Inc

xx% Edward Jones - Stocks
stock company name (ticker symbol)

1.20% Alliant Energy Corp LNT
0.50% AT&T Inc T
0.47% Coca-Cola Co KO
0.57% ConocoPhillips COP
0.59% Enbridge Inc ENB
0.10% Invesco Ltd IVZ
1.28% Johnson & Johnson JNJ
0.24% Kraft Heinz Co KHC
0.95% McDonalds Corp MCD
1.10% Merck & Co MRK
0.39% Pfizer Inc PFE
1.19% Xcel Energy Inc XEL

xx% Edward Jones - Mutual Funds
fund name (ticker symbol) (expense ratio)

6.39% American Balanced Cl A ABALX 0.59% ER
6.54% American Capital Income Builder CAIBX 0.61% ER
7.43% American Income Fund of America AMECX 0.58% ER
0.54% Federated Prime Cash Obligations Cl Ws PCOXX 0.20% ER
0.92% Invesco Hi Yield Municipal Cl A ACTHX 1.22% ER
dbr
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Re: Where put cash for 96-year-old folks?

Post by dbr »

$50k-100k out of seven figures can be kept wherever it is convenient and accessible, easy to keep track of, and takes minimal management.

Chasing yield across a swamp of universally low interest rates is a waste of time and an exercise in futility. 0.75% at a local bank is probably good enough for your (their) needs. Squeezing out an additional few dollars a year in income is absolutely irrelevant to anything meaningful about their situation. You are to be admired for your helpfulness to your parents.
retired@50
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Location: Living in the U.S.A.

Re: Where put cash for 96-year-old folks?

Post by retired@50 »

dbr wrote: Sun Jun 14, 2020 1:43 pm $50k-100k out of seven figures can be kept wherever it is convenient and accessible, easy to keep track of, and takes minimal management.

Chasing yield across a swamp of universally low interest rates is a waste of time and an exercise in futility. 0.75% at a local bank is probably good enough for your (their) needs. Squeezing out an additional few dollars a year in income is absolutely irrelevant to anything meaningful about their situation. You are to be admired for your helpfulness to your parents.
+1
I'd use something simple and convenient.

Regards,
This is one person's opinion. Nothing more.
TheDDC
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Re: Where put cash for 96-year-old folks?

Post by TheDDC »

Do they live in an income tax state? If so, park in a Vanguard Municipal Bond fund.

-TheDDC
Rules to wealth building: 90-100% VTSAX piled high and deep, 0-10% VIGAX tilt, 0% given away to banks, minimize amount given to medical-industrial complex
Jtrob2
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Re: Where put cash for 96-year-old folks?

Post by Jtrob2 »

I would go HY savings account, and do quarterly transfer into local bank checking account for daily living expenses. HY’s right now are still north of 1%, safe and readily available for cash.
jeff1949
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Location: Salem, OR

Re: Where put cash for 96-year-old folks?

Post by jeff1949 »

I would go No Penalty CDs at either Ally or Marcus Goldman Sachs. But hurry as rates are dropping every day. I fear that HY will drop as well so lock in a meager rate with the NP CDs.
Outer Marker
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Re: Where put cash for 96-year-old folks?

Post by Outer Marker »

Ugg. Yet another Ed Jones horror story.

For cash, I would tuck that away in a high yield online savings account. Citizens Access, Ally, or Marcus all paying about 1.3%. At their ages, you might need the money at any time for long term care.

I would not count the farm as part of your bond allocation. It is highly illiquid, can't be used to meet current expenses, or be rebalanced into stocks. It is part of their net worth. Not part of their investment portfolio.

Move the assets to Vanguard or Fidelity and work on simplifying, streamlining, and lowering costs. Unwind all the individual stock positions and move them into an S&P 500 or TSM fund. The Ed Jones mutual fund picks have annual expenses eight to ten times their Vanguard equivelant.

A simplified 3-fund portfolio, or even an all-in-one Target Retirement Income fund might be appropriate in these circumstances.
dbr
Posts: 33842
Joined: Sun Mar 04, 2007 9:50 am

Re: Where put cash for 96-year-old folks?

Post by dbr »

Outer Marker wrote: Sun Jun 14, 2020 3:46 pm Ugg. Yet another Ed Jones horror story.

For cash, I would tuck that away in a high yield online savings account. Citizens Access, Ally, or Marcus all paying about 1.3%. At their ages, you might need the money at any time for long term care.

I would not count the farm as part of your bond allocation. It is highly illiquid, can't be used to meet current expenses, or be rebalanced into stocks. It is part of their net worth. Not part of their investment portfolio.

Move the assets to Vanguard or Fidelity and work on simplifying, streamlining, and lowering costs. Unwind all the individual stock positions and move them into an S&P 500 or TSM fund. The Ed Jones mutual fund picks have annual expenses eight to ten times their Vanguard equivelant.

A simplified 3-fund portfolio, or even an all-in-one Target Retirement Income fund might be appropriate in these circumstances.
I didn't want to say so when I replied above, but I agree that as long as the assets stay at EJ picking away at other issues is sort of pointless.
Topic Author
bfeenix44
Posts: 103
Joined: Thu Dec 26, 2019 8:05 pm

Re: Where put cash for 96-year-old folks?

Post by bfeenix44 »

Thanks to all for the replies.

Yes, the EdJ fees are a thorn in my side, and I'd like to start unwinding some things, but it may be a slower process.

I took to heart many of the advice offerings in my original post here...

viewtopic.php?f=1&t=315263&p=5265654#p5265654

...and I sort of change my mind on a weekly basis, so it's a difficult "ongoing" decision.

Tamara
Gill
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Location: Florida

Re: Where put cash for 96-year-old folks?

Post by Gill »

What are they doing with municipal bonds in a 12% tax bracket?
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal
Outer Marker
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Re: Where put cash for 96-year-old folks?

Post by Outer Marker »

bfeenix44 wrote: Mon Jun 15, 2020 8:13 am
Yes, the EdJ fees are a thorn in my side, and I'd like to start unwinding some things, but it may be a slower process.
...and I sort of change my mind on a weekly basis, so it's a difficult "ongoing" decision.

Tamara
Tamara,

Why delay? Every day those funds sit at EJ is costing your folks money. Call Vanguard or Fidelity and they will help you transition. It might seem daunting, but promise it is not that difficult . . .
CurlyDave
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Re: Where put cash for 96-year-old folks?

Post by CurlyDave »

Outer Marker wrote: Sun Jun 14, 2020 3:46 pm Ugg. Yet another Ed Jones horror story...
While I am no fan of Edward Jones, if I step back 100 yards and look at the overall picture: mid 90s, low 7 figure portfolio, income exceeds expenses by $30-40K per year, I am hard pressed to see a "horror story".

Surely expenses would have been lower elsewhere, and EJ has feathered its own nest, but these people are top 1% ers. Probably more through their own efforts than EJ's, but if there had been significant outright theft, or even serious mismanagement, they would not be in such good shape. Just maybe, some EJ handholding over the years helped them stay the course.

As I said, I am not EJ fan, have never let them touch a penny of my assets, and have recommended people stay away from them. BUT, knee-jerk criticism of what looks to most of the world like a success story does not advance our cause at all.
Outer Marker
Posts: 1238
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Re: Where put cash for 96-year-old folks?

Post by Outer Marker »

CurlyDave wrote: Mon Jun 15, 2020 11:19 am While I am no fan of Edward Jones, if I step back 100 yards and look at the overall picture: mid 90s, low 7 figure portfolio, income exceeds expenses by $30-40K per year, I am hard pressed to see a "horror story".

Surely expenses would have been lower elsewhere, and EJ has feathered its own nest, but these people are top 1% ers. Probably more through their own efforts than EJ's, but if there had been significant outright theft, or even serious mismanagement, they would not be in such good shape. Just maybe, some EJ handholding over the years helped them stay the course.
Half of the "portfolio" is the family farm that has nothing to do with EJ. I don't know whether it was EJ's idea or the OP's to count it as a "bond" but it most definately is not.

A low seven figure net worth is nowhere near the top 1%. You need low eight figures to make it into that club:

90.0% $1,182,390.36
95.0% $2,377,985.22
99.0% $10,374,030.10

https://dqydj.com/net-worth-brackets-we ... e-percent/
Dennisl
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Re: Where put cash for 96-year-old folks?

Post by Dennisl »

TheDDC wrote: Sun Jun 14, 2020 2:07 pm Do they live in an income tax state? If so, park in a Vanguard Municipal Bond fund.

-TheDDC
Seems like unnecessary risk for 96 year olds for a small increase in returns, albeit the risk is low. Seems like they don't need the interest, so main focus should be capital preservation and inflation risk.
MathWizard
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Re: Where put cash for 96-year-old folks?

Post by MathWizard »

CurlyDave wrote: Mon Jun 15, 2020 11:19 am
Outer Marker wrote: Sun Jun 14, 2020 3:46 pm Ugg. Yet another Ed Jones horror story...
While I am no fan of Edward Jones, if I step back 100 yards and look at the overall picture: mid 90s, low 7 figure portfolio, income exceeds expenses by $30-40K per year, I am hard pressed to see a "horror story".

Surely expenses would have been lower elsewhere, and EJ has feathered its own nest, but these people are top 1% ers. Probably more through their own efforts than EJ's, but if there had been significant outright theft, or even serious mismanagement, they would not be in such good shape. Just maybe, some EJ handholding over the years helped them stay the course.

As I said, I am not EJ fan, have never let them touch a penny of my assets, and have recommended people stay away from them. BUT, knee-jerk criticism of what looks to most of the world like a success story does not advance our cause at all.
I was going to post much the same sentiment.

If they are 96, that means that they were born in 1924, and were children of the Great Depression, and retired at about 1969,
pretty much what my parents and my wife's parents were. The fact that they were in the market at all is amazing. Investing was
something that most people did not do. You had to buy stocks in "lots" of 100 shares, or you paid extra for an "odd lot". You didn't
have Etrade or anything like that, you had to have a broker, etc. Edward Jones brokers probably did a lot of good for people (while also
making a lot of money) just by allowing the average person access to the stock market.

Things are so much easier now, thanks to the likes of Jack Bogle, and knowledge much easier to obtain (thanks to the internet).

My wife was forced to go through an Edward Jones rep for her 403b from the school district. She used the best 403b offering available,
but my wife kept her other finances from the EJ rep, and used Vanguard for her IRA money.
02nz
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Re: Where put cash for 96-year-old folks?

Post by 02nz »

Ally and Marcus (Goldman Sachs) are highly recommended here, and I've had good experiences with both. You really won't go wrong with any FDIC-insured bank for amounts up to $250K. I think Marcus has a slightly higher rate right now, but that can change. Ally just dropped rates, and Marcus tends to keep its rate a hair above Ally's.
Morgan Dollar 1921
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Re: Where put cash for 96-year-old folks?

Post by Morgan Dollar 1921 »

I am going to post several quotes from this thread that seem to stand out. Just my humble opinion, if I cross the line, I appreciate admin's feedback or delete it.

But first, congrats to this couple, I was raised on a farm and know the risk and hard work of building a farm land asset.

Best wishes and respect to Tamara, for helping your folks. Quotes to follow.

"My folks own part of a small Iowa farm (we have a very solid, young tenant farmer)"

Very good situation, however very illiquid, not only due to the asset being farm land, but I read partial ownership. My mother was in the same situation with a Co-op apartment in Atlanta GA. Decisions require the input of multiple owners. Still a strong position and long term land prices not a major concern. Values were high within the last 3-4 years but I do not keep tabs on them. I do know from experience in the 1980's that farm land values and associated rental income can crater when the farm economy tanks. Less risk of that presently due to many reasons.I see no reason to detail those here. I agree that farmland should not be part of one's consideration when factoring a bond asset allocation. I would also require a update on soil testing etc, to insure that proper soil values are maintained. Some (not all tenants) will short change this area of soil management. Investment into drainage might be prudent for enhancing the land value, obviously not a long term major concern for a couple in mid-90's.

"Squeezing out an additional few dollars a year in income is absolutely irrelevant to anything meaningful about their situation. You are to be admired for your helpfulness to your parents." Indeed.

Not a tax advisor, but,... "My understanding is that no capital gains taxes are paid in their tax bracket." is a good thing, along with the same tax advantage of qualified dividends.

"I would not count the farm as part of your bond allocation. It is highly illiquid, can't be used to meet current expenses, or be rebalanced into stocks. It is part of their net worth. Not part of their investment portfolio." AGREE TOTALLY.

"I didn't want to say so when I replied above, but I agree that as long as the assets stay at EJ picking away at other issues is sort of pointless." Agreed.

"Why delay? Every day those funds sit at EJ is costing your folks money. Call Vanguard or Fidelity and they will help you transition. It might seem daunting, but promise it is not that difficult . . ." Agreed.

" but if there had been significant outright theft, or even serious mismanagement, they would not be in such good shape. Just maybe, some EJ handholding over the years helped them stay the course." Please google "Bernard Parker" then check your folk's, Jones rep at FINRA. If all clear as of this date, monitor moving forward at least semi-annually. Also be on your toes for your folks, if their rep retires and they are assigned to a new rep. These cases of fraud and mismanagement occur at other brokers also. I wonder about the difference between serious mismanagement and casual mismanagement?

Last but important in my view is the: "0.92% Invesco Hi Yield Municipal Cl A ACTHX 1.22% ER " I would dump that first.

Only a small portion of your portfolio but with a HIGH ER of 1.22 double other choices at least and 25% higher than the category average, plus 85% of it's portfolio BBB or lower, maturity range of 20-30 Years at
50.84%. Add in the YTD Return of -4.36%, ....Yuck!!!

I know of a local couple in their 90's, he is a retired professional of the Ag industry, they recently made a donation to 4-H. Not a suggestion or a hint, but maybe something your folks would like to do in the twilight years of their life, regardless, Best wishes.
02nz
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Re: Where put cash for 96-year-old folks?

Post by 02nz »

02nz wrote: Mon Jun 15, 2020 12:06 pm Ally and Marcus (Goldman Sachs) are highly recommended here, and I've had good experiences with both. You really won't go wrong with any FDIC-insured bank for amounts up to $250K. I think Marcus has a slightly higher rate right now, but that can change. Ally just dropped rates, and Marcus tends to keep its rate a hair above Ally's.
And Marcus has now lowered the rate to just below Ally's.
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