Where To Invest 60k for 75 Year Old

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Gibson72
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Where To Invest 60k for 75 Year Old

Post by Gibson72 » Wed May 04, 2011 11:58 pm

Hello,

My 75 year old father in law has about 60k parked in a checking account realized from a recent home sale. He has other emergency funds, and modest 401k accounts. He is willing to assume some risk, doesn't need to be "savings account" safe, and is seeking ideas regarding where to put it.

My thoughts are some of the vanguard lifestyle funds, the Wellington fund or even the Vanguard 2005 targeted retirement date fund. I also considered Tips or the Vanguard Tips index.

Any thoughts, ideas or confirmations?

Thanks

letsgobobby
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Post by letsgobobby » Thu May 05, 2011 12:02 am

It wouldn't be responsible to reply without a clearer picture of your father in law's financial situation. Consider posting in the suggested format laid out in the sticky at the top of the forum.

Gibson72
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Post by Gibson72 » Thu May 05, 2011 12:30 am

describe wrote:It wouldn't be responsible to reply without a clearer picture of your father in law's financial situation. Consider posting in the suggested format laid out in the sticky at the top of the forum.


I hear you, but I only have a generalized picture, which is as follows

Home Equity - 330k

Debt - 0

401k / Money markets - 200k ish - Not sure about the makeup, probably a bit stock heavy for his age.

SS - He and spouse, don't have the exact no., 2k per month or so

Pension - 1k ish per month

I don't think he is open to a full financial review by me, he just wanted some thoughts on what to do with the 60k. I did encourage him to look at all of his 401k's and IRA's, consider consolidating them into low cost Vanguard funds and go from there, I have no idea if he will pursue that. Just trying to do what I can before the 60k also winds up in a expense heavy, unknown risk factor fund.

If this isn't enough to solicit some general considerations, I understand and will go with my general recommendations to him listed above.

Thanks.

Manbaerpig
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Post by Manbaerpig » Thu May 05, 2011 12:50 am

my magic 8 ball says to put it in a low cost balanced ETF

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White Coat Investor
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Post by White Coat Investor » Thu May 05, 2011 1:34 am

I'd ask him what he intends to use it for-

Regular Living expenses/income- a conservative balanced fund like wellesley
Unknown future expenses- Perhaps a more aggressive balanced fund such as balanced index.
Your inheritance- TSM and/or TISM
A definite expense in 1-5 years- a CD of that duration.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

Gibson72
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Post by Gibson72 » Thu May 05, 2011 2:32 am

Manbaerpig wrote:my magic 8 ball says to put it in a low cost balanced ETF


This is my intuition, which I understand is kind of what I have to go on given the limited info. and lack of objective qualifications. I like the ETF idea, this will give him liquidity if needed.

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Christine_NM
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Post by Christine_NM » Thu May 05, 2011 2:52 am

If it were me, I'd divide it among my existing funds. But since we don't know what his funds are... can't say that is right for him.
10% cash 45% stock 45% bond. Retired, w/d rate 1.5%

retcaveman
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Post by retcaveman » Thu May 05, 2011 6:09 am

May want to check out Target Retirement Income which is designed for people in retirement. It has a 30% stock allocation, including some international and TIPS.
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Dan-Fl
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advice

Post by Dan-Fl » Thu May 05, 2011 6:26 am

Only advice I could offer would not be valuable without know more about his expenses, and his current investments.
Dan-Fl

YDNAL
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Re: Where To Invest 60k for 75 Year Old

Post by YDNAL » Thu May 05, 2011 6:58 am

Gibson72 wrote:Home Equity - 330k

Debt - 0

401k / Money markets - 200k ish - Not sure about the makeup, probably a bit stock heavy for his age.

SS - He and spouse, don't have the exact no., 2k per month or so

Pension - 1k ish per month

I don't think he is open to a full financial review by me, he just wanted some thoughts on what to do with the 60k. I did encourage him to look at all of his 401k's and IRA's, consider consolidating them into low cost Vanguard funds and go from there, I have no idea if he will pursue that. Just trying to do what I can before the 60k also winds up in a expense heavy, unknown risk factor fund.

Concern with $60K is over-stressed IF the other $200K-ish may indeed be already in "expense heavy, unknown risk factor fund(s)"?

My suggestion.... buy a book for your FIL for Father's Day.
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texas_archer
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Post by texas_archer » Thu May 05, 2011 7:18 am

I would put the money into a CD. 75 years old, use the money for a safety net now. Why risk it in today's market? What are his plans for long term care?

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nisiprius
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Post by nisiprius » Thu May 05, 2011 8:11 am

You've got to get a better picture of your dad's expectations, understanding, and risk tolerance. Does he already have stock-market investments and does he personally have a familiarity with stock market risk? Was he holding stock market investments in 2008-2009 and how did he feel? If not, then any stocks might be too much.

Is "some risk, doesn't need to be 'savings account' safe" his own exact words?

Also, don't let his ego enter into the picture. Neither you nor anyone else should tell him that he needs to make his money work harder or anything like that. If he doesn't actually need to make his money worker harder, it's more important to keep it safe than maximize return.

If he wants a savings account on steroids that might sometimes fluctuate by 1%, 2%, even 5%, then IMHO not even a retirement income fund would be suitable. I think you should get some growth charts for mutual funds that seem interesting, say five-year growth charts which are handily available for every mutual fund and happen to include 2008-9. Or start a Morningstar chart at 2008 so you can show losses from start of 2008 to March 2009. That would be about:

15% for Vanguard Target Retirement Income
16% for Vanguard LifeStrategy Income
18% for Vanguard Wellesley Income

Also, I have to ask this: are you and he familiar with a very specific kind of insurance product called a "single premium immediate annuity" or "income annuity" (not to be confused with variable annuities, which are frequently and in my opinion appropriately disparaged in this forum). It might or might not be appropriate but it should be in your mental toolkit and in his.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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