Early Retiring Parent Wants to Invest

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Topic Author
kd301
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Joined: Thu Apr 14, 2022 8:08 pm

Early Retiring Parent Wants to Invest

Post by kd301 »

Hi I needed advise in regards to my parent who is retiring early d/t disability reasons and has no experience in investing. I was looking into setting up at SEP IRA since the parent is a small business owner and also place 50% of what invested into a brokerage? I was wondering if this was a legitimate plan for someone who has nothing invested. Would a target retirement date fund of 2025 be legitimate if invested into SEP IRA and possibly the VTI/ VXUS route for brokerage? I just needed some advise because I know the market is volatile and do not want to invest with my parent's money, however, they would like to invest a small portion (at least $20,000) for at least 5 years.
Doctor Rhythm
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Joined: Mon Jan 22, 2018 3:55 am

Re: Early Retiring Parent Wants to Invest

Post by Doctor Rhythm »

kd301 wrote: Thu May 12, 2022 8:14 pm Hi I needed advise in regards to my parent who is retiring early d/t disability reasons and has no experience in investing. I was looking into setting up at SEP IRA since the parent is a small business owner and also place 50% of what invested into a brokerage? I was wondering if this was a legitimate plan for someone who has nothing invested. Would a target retirement date fund of 2025 be legitimate if invested into SEP IRA and possibly the VTI/ VXUS route for brokerage? I just needed some advise because I know the market is volatile and do not want to invest with my parent's money, however, they would like to invest a small portion (at least $20,000) for at least 5 years.
Welcome to the forum.

As a small business owner, will your parent continue to earn income from this business after retiring? Unless they will, they cannot contribute to an IRA.
Topic Author
kd301
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Joined: Thu Apr 14, 2022 8:08 pm

Re: Early Retiring Parent Wants to Invest

Post by kd301 »

No most likely not within 2-5 years. So a regular taxable account is probably the best option? And if thats the case would you consider the regular etf routes of vti/ vxus with a particular asset allocation? Would you consider I bonds from treasury direct an okay option for my parent to leave as an emergency fund option as well?
Doctor Rhythm
Posts: 1441
Joined: Mon Jan 22, 2018 3:55 am

Re: Early Retiring Parent Wants to Invest

Post by Doctor Rhythm »

You’ll get better advice if you (or ideally, your parent) posts their financial information in this format: viewtopic.php?t=6212.

You’re likely not getting many replies because we don’t know enough about your parent’s situation to give advice.
delamer
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Joined: Tue Feb 08, 2011 6:13 pm

Re: Early Retiring Parent Wants to Invest

Post by delamer »

What income/assets will your parent be living on once retired?

What are the parent’s total liquid assets?
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
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MP123
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Re: Early Retiring Parent Wants to Invest

Post by MP123 »

kd301 wrote: Thu May 12, 2022 11:15 pm No most likely not within 2-5 years. So a regular taxable account is probably the best option? And if thats the case would you consider the regular etf routes of vti/ vxus with a particular asset allocation? Would you consider I bonds from treasury direct an okay option for my parent to leave as an emergency fund option as well?
There have been so many reports here of people being locked out of their Treasury Direct accounts with no easy way to get back in that I'm not sure I would consider it for a true emergency fund. Not that it's a bad investment, it just may not be possible to access right away.

A SEP-IRA requires business income, a traditional IRA requires earned income (including self employment), so it sounds like your relative wouldn't qualify for either (once they retire at least). If they have a few more years of work then the SEP-IRA would be a good choice. If not there's nothing wrong with taxable and it has some advantages like tax loss harvesting.
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