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Father has 300k+ as a 68 year old. What investing strategy would you advise?

Posted: Fri Sep 04, 2020 1:07 pm
by zetsui
He has a 300k+ income. Three rental properties worth 450k+650k+ 650k. He made some bad investments in jnl annuities that gave him virtually no growth. I now have his money in a Vanguard account.

TLDR My dad didn't put too much into passive investments, and got scammed when he did

Weird misc: he is a practicing muslim so doesn't believe in 'interest' (ie usury). IN short he has zero financial knowledge and kind of a big ego :oops: and I will try to teach him the difference between debt (ie T bonds) and credit. But I love him cause he's my pops. One way to mitigate is to just donate the bond bearing parts of his portfolio. I am unaware of other asset/debt classes that are as uncorrelated as bonds to equities. This is a small consideration, but one I thought I would mention as he always brings it up.

My feeling would be to wait for the dip in the next recession 1.5 years or drawdown of 33-40% and invest the entire 300k in a vanguard 3-4 fund portfolio. Hopefully over the next 6+ years after that he can benefit from growth.

Risk: At worst case he should be able to take 200k of the 300k out, but I doubt we would face that situation. So I would put 70% stock and 30% bond, target date portfolio

Thoguhts? Any Vanguard funds or portfolio allocations to look into commodities, lifestrategy? Any guarenteed payout funds? How would hitting a RMWithrawal affect this retirement account at 5% a year?

Re: Father has 300k+ as a 68 year old. What investing strategy would you advise?

Posted: Fri Sep 04, 2020 1:16 pm
by sailaway
Would he prefer shariah compliant funds? They generally have higher fees, but would be more in line with his beliefs than what you are suggesting.

He has $300k in income (maybe? you use the word income, but seem to indicate that this is actually cash?) and well over a million in real estate, he isn't exactly hurting here. And he certainly isn't nearly as lacking in financial knowledge as you seem to think. Don't be so condescending, especially given that you have a market timing plan, and don't try to force your vision on him.

He needs to start by defining his goals. When does he want to retire? How much does he want to spend in retirement? What will be his income sources? Does he want to leave a legacy?

Re: Father has 300k+ as a 68 year old. What investing strategy would you advise?

Posted: Fri Sep 04, 2020 1:25 pm
by zetsui
sailaway wrote: Fri Sep 04, 2020 1:16 pm Would he prefer shariah compliant funds? They generally have higher fees, but would be more in line with his beliefs than what you are suggesting.

He has $300k in income (maybe? you use the word income, but seem to indicate that this is actually cash?) and well over a million in real estate, he isn't exactly hurting here. And he certainly isn't nearly as lacking in financial knowledge as you seem to think. Don't be so condescending, especially given that you have a market timing plan, and don't try to force your vision on him.

He needs to start by defining his goals. When does he want to retire? How much does he want to spend in retirement? What will be his income sources? Does he want to leave a legacy?
300k in income per annum
And 300k in a trad ira rolledover

Re: Father has 300k+ as a 68 year old. What investing strategy would you advise?

Posted: Fri Sep 04, 2020 1:33 pm
by Katietsu
sailaway wrote: Fri Sep 04, 2020 1:16 pm Would he prefer shariah compliant funds? They generally have higher fees, but would be more in line with his beliefs than what you are suggesting.

He has $300k in income (maybe? you use the word income, but seem to indicate that this is actually cash?) and well over a million in real estate, he isn't exactly hurting here. And he certainly isn't nearly as lacking in financial knowledge as you seem to think. Don't be so condescending, especially given that you have a market timing plan, and don't try to force your vision on him.

He needs to start by defining his goals. When does he want to retire? How much does he want to spend in retirement? What will be his income sources? Does he want to leave a legacy?
I agree with all of this. I think maybe his ego was passed on?

Re: Father has 300k+ as a 68 year old. What investing strategy would you advise?

Posted: Fri Sep 04, 2020 1:39 pm
by clown
Rather than owning bonds, which pay interest that he does not believe in, how about the following approach. Keep a big piece in cash instead of bonds, and invest the rest in S&P500 index. In addition to avoiding interest, this would lessen the need to sell securities in a down market.

Re: Father has 300k+ as a 68 year old. What investing strategy would you advise?

Posted: Fri Sep 04, 2020 1:55 pm
by zetsui
clown wrote: Fri Sep 04, 2020 1:39 pm Rather than owning bonds, which pay interest that he does not believe in, how about the following approach. Keep a big piece in cash instead of bonds, and invest the rest in S&P500 index. In addition to avoiding interest, this would lessen the need to sell securities in a down market.
inflation would eat the cash, I wonder if there are any vanguard indeces that fit the bill or do they all do it with bonds?

Re: Father has 300k+ as a 68 year old. What investing strategy would you advise?

Posted: Fri Sep 04, 2020 2:01 pm
by fuddbogle
zetsui wrote: Fri Sep 04, 2020 1:55 pm
clown wrote: Fri Sep 04, 2020 1:39 pm Rather than owning bonds, which pay interest that he does not believe in, how about the following approach. Keep a big piece in cash instead of bonds, and invest the rest in S&P500 index. In addition to avoiding interest, this would lessen the need to sell securities in a down market.
inflation would eat the cash, I wonder if there are any vanguard indeces that fit the bill or do they all do it with bonds?
The cash would lose to inflation but that's why a large portion would be in the S&P 500.

Re: Father has 300k+ as a 68 year old. What investing strategy would you advise?

Posted: Fri Sep 04, 2020 2:03 pm
by aristotelian
NTSX? Invests in Treasury futures rather than Treasuries, so instead of loaning money to the government he would be betting on loans to the government. Expected return is about 90% of S&P but with lower volatility.

Is he allowed to invest in S&P500 or does he need a Shariah compliant fund? Ironically, those largely charge usurious expense ratios.

Re: Father has 300k+ as a 68 year old. What investing strategy would you advise?

Posted: Fri Sep 04, 2020 2:14 pm
by sailaway
aristotelian wrote: Fri Sep 04, 2020 2:03 pm NTSX? Invests in Treasury futures rather than Treasuries, so instead of loaning money to the government he would be betting on loans to the government. Expected return is about 90% of S&P but with lower volatility.

Is he allowed to invest in S&P500 or does he need a Shariah compliant fund? Ironically, those largely charge usurious expense ratios.
HLAL's .5% isn't ridiculous for such a specialized fund.

Re: Father has 300k+ as a 68 year old. What investing strategy would you advise?

Posted: Fri Sep 04, 2020 2:19 pm
by cashboy
for your consideration:

use a variation of the three-fund portfolio described here at BH. https://www.bogleheads.org/wiki/Three-fund_portfolio

(1)
SP500 or Total Stock Market fund

(2)
an International fund

(3)
instead of a Bond fund, use a Shariah compliant Bank for cash deposit (based in USA)

determine %s for each of the above based on risk tolerance.

example (not a recommendation since more details are required about your father's overall finances and expenses and life expectancy):
35% SP500 or Total Stock Market
15% International
50% Shariah compliant bank

start now; do not market time.

Re: Father has 300k+ as a 68 year old. What investing strategy would you advise?

Posted: Fri Sep 04, 2020 2:31 pm
by 7eight9
SP500 is not Shariah-compliant. He would need to invest in the SP500 Shariah.

SP500 Shariah --- https://www.spglobal.com/spdji/en/indic ... /#overview

Re: Father has 300k+ as a 68 year old. What investing strategy would you advise?

Posted: Fri Sep 04, 2020 2:42 pm
by MotoTrojan
sailaway wrote: Fri Sep 04, 2020 1:16 pm Don't be so condescending, especially given that you have a market timing plan, and don't try to force your vision on him.
I got a chuckle out of that market timing prediction too.

OP, you are the one who needs to brush up on your financial knowledge and knock down the ego a peg or three.

Re: Father has 300k+ as a 68 year old. What investing strategy would you advise?

Posted: Fri Sep 04, 2020 3:11 pm
by Jack FFR1846
Is he making money on his rentals? If so, why doesn't he just put his money into more rentals? Better than getting scammed out of it. Seems he must know how to do it with 3 rentals now. Or is he losing money on them?

Re: Father has 300k+ as a 68 year old. What investing strategy would you advise?

Posted: Fri Sep 04, 2020 3:19 pm
by willthrill81
Jack FFR1846 wrote: Fri Sep 04, 2020 3:11 pm Is he making money on his rentals? If so, why doesn't he just put his money into more rentals? Better than getting scammed out of it. Seems he must know how to do it with 3 rentals now. Or is he losing money on them?
If they are profitable, I agree that more rentals sound like a good option for him. With $300k, you could buy outright a couple of good rentals in some areas of the country.

If he doesn't want to go that route and wants to avoid fixed income, a relatively small allocation to gold (e.g. 10-20%) might be in order to help stabilize an otherwise stock heavy portfolio.

Re: Father has 300k+ as a 68 year old. What investing strategy would you advise?

Posted: Fri Sep 04, 2020 3:26 pm
by finite_difference
7eight9 wrote: Fri Sep 04, 2020 2:31 pm SP500 is not Shariah-compliant. He would need to invest in the SP500 Shariah.

SP500 Shariah --- https://www.spglobal.com/spdji/en/indic ... /#overview
+1. SP500 Shariah for stocks, plus rentals and some cash or Tbills for “bonds”, would seem like a pretty good way to go. You could certainly do much worse.

(I’m assuming the rentals are profitable and not money pits.)

Re: Father has 300k+ as a 68 year old. What investing strategy would you advise?

Posted: Fri Sep 04, 2020 6:15 pm
by zetsui
aristotelian wrote: Fri Sep 04, 2020 2:03 pm NTSX? Invests in Treasury futures rather than Treasuries, so instead of loaning money to the government he would be betting on loans to the government. Expected return is about 90% of S&P but with lower volatility.

Is he allowed to invest in S&P500 or does he need a Shariah compliant fund? Ironically, those largely charge usurious expense ratios.
Pretty much agree on that. I think its better to just pay the bond appreciation to 'charity' (knkown as zakat)

That and they lack diversity and are located in nations with non trnasparent accounting standards

Re: Father has 300k+ as a 68 year old. What investing strategy would you advise?

Posted: Fri Sep 04, 2020 6:19 pm
by zetsui
Jack FFR1846 wrote: Fri Sep 04, 2020 3:11 pm Is he making money on his rentals? If so, why doesn't he just put his money into more rentals? Better than getting scammed out of it. Seems he must know how to do it with 3 rentals now. Or is he losing money on them?
he doesn't track expenses, and north jersey is a VERY tax heavy part of the nation. Cap rate around 8% in our county. So my feeling ie he might not be making much money from the rentals. At least not much more than a passive investing strategy over a decade or two. Although IFeel you on this, I am forcing him to track expenses in an excel sheet and we can see how it worked out

Better that, than something like annuities, which he had no clue wtf he was investing in. Missed the longest bull run ! :oops:

How would I structure my father's retirement?

Posted: Fri Sep 11, 2020 6:02 pm
by zetsui
[Thread merged into here, see below. --admin LadyGeek]

68 year old physician. He plans on working at most only 3 years more

Has only 300k in his retirement account and three rental properties

Re: How would I structure my father's retirement?

Posted: Fri Sep 11, 2020 6:09 pm
by cheese_breath
Has he asked for your help?
What will his expenses be during retirement?
Is your mother alive? How will he provide for your her if he dies?
Who manages the rental properties?
How much income does he receive from them?
What are they worth?
Is he open to selling them?

Re: How would I structure my father's retirement?

Posted: Fri Sep 11, 2020 6:29 pm
by abuss368
zetsui wrote: Fri Sep 11, 2020 6:02 pm 68 year old physician. He plans on working at most only 3 years more

Has only 300k in his retirement account and three rental properties
Honestly over the years I have learned more and more to not get involved. I recently had family who finally engaged Vanguard PAS and they could not be happier!

In fact I would not be surprised if I do that someday as I may not want to be as involved!

It is just better all the way around.

Re: How would I structure my father's retirement?

Posted: Fri Sep 11, 2020 6:39 pm
by valleyrock
Get him some books by Bill Bernstein. He's a physician.

Maybe that will click with your father and he'll end up managing YOUR money.

Re: How would I structure my father's retirement?

Posted: Fri Sep 11, 2020 6:44 pm
by sailaway
There is a reason case reports have a format. No one can give you an appropriate plan with that little information.

Re: How would I structure my father's retirement?

Posted: Fri Sep 11, 2020 6:49 pm
by Watty
abuss368 wrote: Fri Sep 11, 2020 6:29 pm Honestly over the years I have learned more and more to not get involved. I recently had family who finally engaged Vanguard PAS and they could not be happier!
+1

Or suggest that he post here himself and read some of the wikis and learn more about investing. Learning about investing is not that hard and he is certainly capable of learning what he needs to know.

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

A huge risk if you take over managing his finances is that you could be hit by the proveriable Mack truck and they he would not know what to do with his money.

Even if you don't post it here, if he has asked you to help him then it would be good to get his information all together in one place in this format since just going through that process will be a good learning experience.

viewtopic.php?f=1&t=6212

For example a huge unknown is how much he will be able to save over the next three years and what his expenses are. We also don't know if his rental properties are $50K bungalows in the midwest or expensive beach houses in Florida.

There really is not enough information to give any good suggestions.

Re: Father has 300k+ as a 68 year old. What investing strategy would you advise?

Posted: Sat Sep 12, 2020 7:50 am
by LadyGeek
zetsui - In order to give appropriate advice, it's best to keep all the information in one spot. I merged your update back into the original thread. If you have any questions, ask them here.

The OP has a separate question here: Father invested 300k in Jackson Annuities, but use this thread to discuss a path forward.

Re: Father has 300k+ as a 68 year old. What investing strategy would you advise?

Posted: Sat Sep 12, 2020 8:19 am
by abuss368
The family member I did recommend Vanguard PAS to was placed in the Four Fund Portfolio.

Re: Father has 300k+ as a 68 year old. What investing strategy would you advise?

Posted: Sat Sep 12, 2020 8:36 am
by aristotelian
Do the rentals cover his income needs? If he is looking for income to bridge the gap, you could put most of the $300K in a good single premium fixed annuity (SPIA).

I would consider the rentals to be risk assets, so I would not want to put all of the $300k in stocks.

Re: Father has 300k+ as a 68 year old. What investing strategy would you advise?

Posted: Sat Sep 12, 2020 9:07 am
by Watty
Something that has not been mentioned is that if he lives in a paid off house, has low expenses, and will get Social Security then he may be doing fine especially with the rental income.

One of the first things to do would be to figure out just what he needs, then you can focus on how to cover those needs.

Re: Father has 300k+ as a 68 year old. What investing strategy would you advise?

Posted: Sat Sep 12, 2020 12:18 pm
by sergeant
OP, I think you and your father would be best served by recommending VPAS. You are not the best person to manage his finances.

Re: Father has 300k+ as a 68 year old. What investing strategy would you advise?

Posted: Sat Sep 12, 2020 12:23 pm
by petulant
Why was OP not happy with the previous thread about Shariah complaint bond alternatives?

viewtopic.php?p=5466531

Re: Father has 300k+ as a 68 year old. What investing strategy would you advise?

Posted: Tue Sep 15, 2020 1:53 am
by zetsui
what fees does Vanguard PAS charge?

Also I have been reading and educating myself on finance this past year with Bogle heads, Ramit Sheti, and ahve an engineering/stats background. Portfolio charst too. I think something like a golden butterfly would fit a lot of his needs.

But I agree with the sentiment (some members here are unncessarily hostile, calling me egotistic- I wouldn't help my father out of ego), he should have and should just invest in things he understands going forwward, including rental properties.

Re: Father has 300k+ as a 68 year old. What investing strategy would you advise?

Posted: Tue Sep 15, 2020 1:55 am
by 000
Just let it be unless he is asking for your advice.

Re: Father has 300k+ as a 68 year old. What investing strategy would you advise?

Posted: Tue Sep 15, 2020 6:37 am
by toocold
I think a PAS is a good idea unless your father is interested in the subject. For me, the only reason why I helped my mother with her finances is because she asked me. I would not impose my "knowledge" on them.

Re: Father has 300k+ as a 68 year old. What investing strategy would you advise?

Posted: Tue Sep 15, 2020 2:47 pm
by BogleDan
zetsui wrote: Fri Sep 04, 2020 6:19 pm
he doesn't track expenses, and north jersey is a VERY tax heavy part of the nation. Cap rate around 8% in our county. So my feeling ie he might not be making much money from the rentals. At least not much more than a passive investing strategy over a decade or two. Although IFeel you on this, I am forcing him to track expenses in an excel sheet and we can see how it worked out
An 8-cap is actually pretty good.

Re: How would I structure my father's retirement?

Posted: Tue Sep 15, 2020 3:50 pm
by inbox788
zetsui wrote: Fri Sep 11, 2020 6:02 pm68 year old physician. He plans on working at most only 3 years more

Has only 300k in his retirement account and three rental properties
What kind of workplace? Any ownership or partnership equity?

Own home? Value? Annual maintenance expenses?

What kind of help is he asking for?

What kind of financial position are you in? Are you able to help out financially if needed?

Unless he's interested in completely overhauling his financial investment plans right before retirement, a better plan of attack would be figuring out budgeting in retirement. Big income and less than expected savings implies high spending. Sure you can tweak and improve the investment side of things, but spending is where the money is (being lost). No more big income is going to become a big problem if proper spending isn't monitored.

Working at least 3 more years instead of at most 3 years can make a big difference in outlook.