$5k inheritance & portfolio question . . .

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MikeT
Posts: 341
Joined: Sun Jul 10, 2016 11:26 pm

$5k inheritance & portfolio question . . .

Post by MikeT » Wed Oct 04, 2017 1:27 pm

I’m posting this question for a friend:

Question: I am age 61 and file taxes jointly with my husband; federal tax rate 27%, state tax rate 3.07%. We live in Pennsylvania, and we have both joint and separate bank accounts and investments. This information pertains to my share of assets. My total portfolio is low six figures. Six months of emergency expenses for me would be about $25,000. I don’t have that $25k segregated in a separate account but is included in the figures below. I have no debt. I am not comfortable with risk and am not sure of a good percentage of stocks and bonds and international allocation. I’m coming into a $5,000 inheritance which I want to invest for retirement.

So, what should I do with the $5,000 and any thoughts overall on my situation?

(My initial thinking is that the $5k should be invested aggressively in a Roth IRA. Even though I’m risk adverse, maybe I should consider this to be the ‘last-in’ money, or ‘found-money’ so maybe I should be willing to take more risks with it since the rest of my investments are very conservative).

Here’s what I got:

Vanguard 401(k)
Plan Balance/Vested Balance: $53,387
Rate of Return: 3.11%
Fund: 100% VASIX Vanguard LifeStrategy Income Fund (Investor Shares)

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Vanguard (taxable account) – (includes my emergency fund of $25k)
a) my account: $46,449
b) joint with spouse: $31,177
30% stocks, 70% bonds
both in:
Symbol: VTINX
Name: Vanguard Target Retirement Income Fund
Expense Ratio: .13%

--------

TIAA
Tax-Deferred Annuity Plan
$3,695
Investment: TIAA Traditional
Asset Class: Guaranteed
Crediting Rate: 3.242%
Guaranteed Rate: 3.000%
Additional Amount: .242%

------

Investment: TIAA Traditional
Asset Class: Guaranteed
Crediting Rate: 4.234%
Guaranteed Rate: 3.000%
Additional Amount: 1.234%
$7,336

-------

Roth IRAs
IRA (closed)
Investment: TIAA Traditional
Asset Class: Guaranteed
Crediting Rate: 3.000%
Guaranteed Rate: 3.000%
Additional Amount: 0%
$5,240

--------

IRA (open)
Investment: TIAA Traditional
Asset Class: Guaranteed
Crediting Rate: 1.547%
Guaranteed Rate: 1.000%
Additional Amount: .547%
$13,208

Thanks for any comments/thoughts on this!

neilpilot
Posts: 934
Joined: Fri Dec 04, 2015 1:46 pm
Location: Memphis area

Re: $5k inheritance & portfolio question . . .

Post by neilpilot » Wed Oct 04, 2017 1:45 pm

I'm all for simplicity. Why not simply commingle the 5k with your Vanguard (taxable account)? What's the point of keeping it separate?

If your income qualifies you for a Roth you can make that contribution anyway, independent of the inheritance.

snarlyjack
Posts: 419
Joined: Fri Aug 28, 2015 12:44 pm
Location: Montana

Re: $5k inheritance & portfolio question . . .

Post by snarlyjack » Wed Oct 04, 2017 1:58 pm

Hi MikeT,

I really like the LifeStrategy Funds.
You can choose the AA that you feel comfortable with,
(20/80, 40/60, 60/40, 80/20) stock/bond ratio.
It has a mix of the Total Stock Market, Total International Market
& the Total Bond Market with a bit of International Bonds.
I own mine in my Roth IRA.

Good Luck & Welcome to Bogleheads.

MikeT
Posts: 341
Joined: Sun Jul 10, 2016 11:26 pm

Re: $5k inheritance & portfolio question . . .

Post by MikeT » Thu Oct 05, 2017 9:00 am

I agree @neilpilot. It doesn't need to be segregated.

If the consensus is she's too conservative, then comingling the $5k and bumping up the stock allocation would accomplish the same goal.

Thx
Mike

MikeT
Posts: 341
Joined: Sun Jul 10, 2016 11:26 pm

Re: $5k inheritance & portfolio question . . .

Post by MikeT » Thu Oct 05, 2017 9:00 am

I too like the life strategy funds @snarlyjack. Good point!

Mike

MikeT
Posts: 341
Joined: Sun Jul 10, 2016 11:26 pm

Re: $5k inheritance & portfolio question . . .

Post by MikeT » Sat Oct 07, 2017 7:18 am

I guess the big question which is entirely subjective is what percentage of stocks someone 61 should have?

Mike

Mors
Posts: 29
Joined: Wed Aug 16, 2017 10:06 am

Re: $5k inheritance & portfolio question . . .

Post by Mors » Sat Oct 07, 2017 8:22 pm

MikeT wrote:
Sat Oct 07, 2017 7:18 am
I guess the big question which is entirely subjective is what percentage of stocks someone 61 should have?

Mike
50-70% , according to risk tolerance

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