Preservation of capital at Age 93

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Topic Author
ADAMNOGGI
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Preservation of capital at Age 93

Post by ADAMNOGGI » Tue Jan 08, 2019 4:02 pm

On 24 Nov 2018, I awoke to the fact I would be 93 in a month. I don`t think I panicked as much as I made a decision. Regardless, I sold my Vanguard holdings in a Vanguard taxable retirement account (VTINX) and bought $600K of Vanguard Treasury Money Market Fund VUSXX. Took a slight loss on the sale which will be OK at tax time to offset about the same amount in cap gains.


I also have $250K in CD at Penfed, maturing now and then, in 2019.I have income of $105K pa in COLA supported Fed pension and live below that income. Have about $30K in my emergencey fund (high, I suppose, but at my age one never knows).Forseeable purchases is possibly splurge on 2019 Honda Passport (I'm driving a 20 year old Mercedes 280 and the new safety features and size of the Passport intrigue me) My goal is to preserve what I have for one heir (daughter). I am an amateur investor. All I know came from this forum (Thankyou all so much) You have made it easy.

My situation is not complicated but I plan to stay the course with the CDs (2.3%+) and the Treasuries (about 2%) and my question is :
Is there a better course of action to accomplish my goal of capital preservation and mild appreciation for my heir?

Thanks to all.

fru-gal
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Re: Preservation of capital at Age 93

Post by fru-gal » Tue Jan 08, 2019 4:05 pm

No advice, but Wow, congratulations, and healthy enough to still be driving!

barnaclebob
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Re: Preservation of capital at Age 93

Post by barnaclebob » Tue Jan 08, 2019 4:12 pm

In my opinion you have no need for risk in the market but you have decent ability to take risk since you live below your pension income. Erosion of buying power due to inflation is always another risk as well. Personally I think a portfolio having anywhere from 30% to 50% in stocks wouldn't be absurd in your situation.

But its your money and if parking it all in super secure investments lets you sleep at night then that's great too.

123
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Re: Preservation of capital at Age 93

Post by 123 » Tue Jan 08, 2019 4:27 pm

Congradulations on attaining age 93 with such assets. I've helped a number of older family friends and relatives with their accounts and investments and the one thing I've learned to appreciate is that they are most comfortable with CDs and Treasuries. Once you've "won the game" there may not be much reason to risk assets with equity investments if you don't have to. What boring account statements you'll recieve and you'll sleeps so much better at night.
The closest helping hand is at the end of your own arm.

bloom2708
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Re: Preservation of capital at Age 93

Post by bloom2708 » Tue Jan 08, 2019 4:33 pm

At 93, your plan/moves seem fine.

When my grandma turned 90 we had our first kid. We hope she would live long enough (grandma) to see our kids grow. She lived to 107.5.

A pretty good run. Congrats on your longevity and wishing you many more birthdays and health.
"We are not here to agree with you; we are here to provoke thoughtfulness." Unknown Boglehead

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unclescrooge
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Re: Preservation of capital at Age 93

Post by unclescrooge » Tue Jan 08, 2019 8:58 pm

Congrats on reaching 93 with more assets than than most people start retirement!!!

If you have no need for the money, and it's meant for your daughter, shouldn't it be invested based on her asset allocation?

2015
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Re: Preservation of capital at Age 93

Post by 2015 » Tue Jan 08, 2019 9:31 pm

unclescrooge wrote:
Tue Jan 08, 2019 8:58 pm
Congrats on reaching 93 with more assets than than most people start retirement!!!

If you have no need for the money, and it's meant for your daughter, shouldn't it be invested based on her asset allocation?
I wouldn't think so based on the actions OP took in response to turning 93. I agree with prior posters that OP has no need to be in the market if not comfortable doing so. I agree it may not be optimal in terms of legacy, but sometimes all the time temperament and behavior serve as the bedrock of financial success.

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Nate79
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Re: Preservation of capital at Age 93

Post by Nate79 » Tue Jan 08, 2019 10:12 pm

Have you considered starting to gift the money to your heir now instead of waiting? You have no need for the money.

Topic Author
ADAMNOGGI
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Re: Preservation of capital at Age 93

Post by ADAMNOGGI » Fri Jan 11, 2019 11:47 am

Thanks to all. Confirmation and a couple of things to consider. Very much appreciated.

badger42
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Re: Preservation of capital at Age 93

Post by badger42 » Fri Jan 11, 2019 11:54 am

For money you're definitely passing down, have you considered TIPS?

They're extremely low risk (US government backed, etc) and guarantee the purchasing power of the future inheritance, which CDs and regular treasuries do not.

02nz
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Re: Preservation of capital at Age 93

Post by 02nz » Fri Jan 11, 2019 11:57 am

You should share with us your tips for longevity! I'd add a suggestion to invest the money you expect to pass on to your daughter in a taxable account, using tax-efficient instruments like Vanguard index ETFs. When you pass (which will be in many years!) your daughter will get a free step-up in the basis.

MathWizard
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Re: Preservation of capital at Age 93

Post by MathWizard » Fri Jan 11, 2019 12:56 pm

I have no recommendations other than to say that I think that you have a reasonable plan.

You have been very successful in more ways than one.

Looking at the driver's assist features in the Honda Passport seems a very wise move
if you continue driving. I am considering those things for my next vehicle purchase as well.

I used to love to drive, and would drive into the wee hours of the noght while my family slept
so that we would get places sooner. Now I think of driving as more of a chore that I would rather do
without.

Now if they would just get to where the windshield could be replaced by a big screen TV, and the
seats with nice cushy recliners, I could sleep on the way to my destination. My car would become my
chauffeur.

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RickBoglehead
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Re: Preservation of capital at Age 93

Post by RickBoglehead » Fri Jan 11, 2019 1:03 pm

unclescrooge wrote:
Tue Jan 08, 2019 8:58 pm
Congrats on reaching 93 with more assets than than most people start retirement!!!

If you have no need for the money, and it's meant for your daughter, shouldn't it be invested based on her asset allocation?
I would agree with this question.

If you know you won't need any of the funds, then invest them based on her asset allocation. If you know you will need some, then split it and make what you might need as you plan, and what goes to her based on her asset allocation.

A big advantage to this is stepped up basis. If you can grow what you're leaving her substantially, when it passes to her she'll have no gains. If you leave it at 2-3% interest, she'll also have no/little gains.

I have 529s for future grandchildren. They are 100% in Vanguard Institutional Index. No need for most of them for 18+ years.
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.

WhiteMaxima
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Re: Preservation of capital at Age 93

Post by WhiteMaxima » Fri Jan 11, 2019 1:40 pm

Start to gift to your heirs now. Use maximum allowed. Happy life.

dbr
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Re: Preservation of capital at Age 93

Post by dbr » Fri Jan 11, 2019 1:40 pm

ADAMNOGGI wrote:
Tue Jan 08, 2019 4:02 pm

My situation is not complicated but I plan to stay the course with the CDs (2.3%+) and the Treasuries (about 2%) and my question is :
Is there a better course of action to accomplish my goal of capital preservation and mild appreciation for my heir?
There is certainly nothing wrong or to worry about with what you have chosen.

The only question or point that I would raise is that capital preservation and (mild) appreciation are contradictory objectives but also somewhat unquantified. Capital appreciation should be measured in real dollars, so your holdings are probably just at zero real return and maybe sometimes negative. I don't think those choices could be taken to represent mild appreciation even in nominal dollars and certainly not in real dollars. Another poster advocated for investing in the interests of the prospective heir, which might be more aggressive than your choice.

That said, there is much to speak for keeping the money certain (if in nominal terms) and there is no particular incentive to obtain any return at all, really. I think a point deserving more thought is gifting the money sooner rather than later, as mentioned.

OldSport
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Re: Preservation of capital at Age 93

Post by OldSport » Fri Jan 11, 2019 4:43 pm

ADAMNOGGI wrote:
Tue Jan 08, 2019 4:02 pm
On 24 Nov 2018, I awoke to the fact I would be 93 in a month. I don`t think I panicked as much as I made a decision. Regardless, I sold my Vanguard holdings in a Vanguard taxable retirement account (VTINX) and bought $600K of Vanguard Treasury Money Market Fund VUSXX. Took a slight loss on the sale which will be OK at tax time to offset about the same amount in cap gains.


I also have $250K in CD at Penfed, maturing now and then, in 2019.I have income of $105K pa in COLA supported Fed pension and live below that income. Have about $30K in my emergencey fund (high, I suppose, but at my age one never knows).Forseeable purchases is possibly splurge on 2019 Honda Passport (I'm driving a 20 year old Mercedes 280 and the new safety features and size of the Passport intrigue me) My goal is to preserve what I have for one heir (daughter). I am an amateur investor. All I know came from this forum (Thankyou all so much) You have made it easy.

My situation is not complicated but I plan to stay the course with the CDs (2.3%+) and the Treasuries (about 2%) and my question is :
Is there a better course of action to accomplish my goal of capital preservation and mild appreciation for my heir?

Thanks to all.
Congratulations on your situation! You can easily splurge on a Honda Passport or whatever you want. You live below your pension. You are fine.

I think the CDs and Money Market are too conservative to preserve capital long term. 2% is lower than inflation, so that is effectively guaranteed negative real return. I'd recommend something like Vanguard Wellesley or Vanguard Target Retirement Income, or maybe split between those two.

Topic Author
ADAMNOGGI
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Joined: Wed Jun 15, 2016 11:02 am

Re: Preservation of capital at Age 93

Post by ADAMNOGGI » Mon Jan 14, 2019 2:32 pm

02nz wrote:
Fri Jan 11, 2019 11:57 am
You should share with us your tips for longevity! I'd add a suggestion to invest the money you expect to pass on to your daughter in a taxable account, using tax-efficient instruments like Vanguard index ETFs. When you pass (which will be in many years!) your daughter will get a free step-up in the basis.
My tips for longevity? Probably of little value. I was drafted twice - WWII and Korea. Combat assignments.
Have done a few other risky things so I consider myself lucky instead of wise. In normal routine I eat what I want, a very little wine when the occasion calls for it, smoked for 42 years and quit cold turkey 30 years ago (the withdrawal was a BKitty). On the good side played a lot, I mean a whole lot, of racquet sports, climbed a mountain or two and skied a bit in Europe. Never turned down a good time. Hope you do as well-no, better than I . Good luck. It's all fate, and no bad genes, in my opinion.

Thanks for the suggestion. Tax efficiency is where I don't look so good. Will consider. Thankyou.

Nowizard
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Re: Preservation of capital at Age 93

Post by Nowizard » Mon Jan 14, 2019 2:39 pm

Wonderful and inspiring story. Congratulations. Two possibilities are to gift your daughter now, as has been mentioned and consider a simple portfolio such as the three-fund portfolio. Research suggests that a 20/80 stock/bond portfolio will outperform a 100% bond portfolio without extreme volatility. However, at 93 you definitely deserve to do what makes you feel comfortable, and the probability is that there will be something left for your daughter regardless of what you do since you have income greater than your expenses. You do have a question about what to do with any RMD's, presumably.

Tim

MotoTrojan
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Re: Preservation of capital at Age 93

Post by MotoTrojan » Mon Jan 14, 2019 4:32 pm

WhiteMaxima wrote:
Fri Jan 11, 2019 1:40 pm
Start to gift to your heirs now. Use maximum allowed. Happy life.
Could pass all of it with no penalty. The max allowed without filing a simple piece of paper is meaningless now unless the OP expects to receive a mid 7-figure windfall.

WhiteMaxima
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Re: Preservation of capital at Age 93

Post by WhiteMaxima » Mon Jan 14, 2019 5:02 pm

Could you super fund the 529 plan for your great great children. In that case, you do more aggressive.

NMBob
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Re: Preservation of capital at Age 93

Post by NMBob » Mon Jan 14, 2019 5:37 pm

Congratulations!!!

In the slim case you haven't, you have filled out transfer on death forms on your accounts so they don't go into the will / estate but directly to your daughter.

Another fine thing might be , if appropriate , to discuss with her what she might do with it. Imagine someone not very familiar with investing trying to figure out what to do and whom to listen to with hundreds of thousands just inherited.

Since your pension covers everything, you can take some risk, would setting it up to what your daughter should be in, be something folks thinks is reasonable or sensible to do? Basically giving her the risk and growth profile of it today and less worries what to do the day of the transfer? Taxable brokerage accounts are inherited tax free and even give the inheritor the benefit of establishing the inherited cost basis of the holdings, as the price the day of the inheritance, not the day they were bought by the giver perhaps decades ago.

Or the other side, if you do not have long term care insurance, at this point in your life, then maybe you need to have a big pile of money in low risk in case you have assisted living costs etc. for a few years that eat money pretty quick. Something that is happening with my mom.

nice story, good job!

megabad
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Re: Preservation of capital at Age 93

Post by megabad » Mon Jan 14, 2019 6:06 pm

Since you have already realized the losses/gains on your taxable account, I would just stick with your plan. Sometimes the simple and comfortable route is the way to go. At least that is how I would feel if I was blessed to be alive and well for 93 years. After 93 years of complexity, just keep it simple and keep things as they are. Heirs should feel blessed to get anything at all from you.

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BL
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Re: Preservation of capital at Age 93

Post by BL » Mon Jan 14, 2019 7:15 pm

Congratulations on a live well-lived! I think you have done great, and would just enjoy life and a new car with no need to worry or second-guess your moves. You have simplified your life and that is worth a lot. There are many ways to manage investments, and no one knows ahead of time which is going to be the most successful. When the markets crash, you can be unconcerned.

SoonerD
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Re: Preservation of capital at Age 93

Post by SoonerD » Mon Jan 14, 2019 8:01 pm

unclescrooge wrote:
Tue Jan 08, 2019 8:58 pm
Congrats on reaching 93 with more assets than than most people start retirement!!!

If you have no need for the money, and it's meant for your daughter, shouldn't it be invested based on her asset allocation?
Using portfolio charts, a portfolio invested 50% US Stock Market, 20% Cash and 25% US Bond Market generated a $1.1mm balance on $113,000 initial investment for the period 1988 - 2018 (7.6% CAGR).

The OP may have started his retirement with more assets than most who will retire in 2019.

The more remarkable part, to me, is he had a COLAd pension that perhaps started at $50k in the late 1980s and is paying 6-figures today. Letting 100m grow to a million is the easy part. So younger retirees with less than $1mm shouldn't feel bad, all you need is a pension that covers all your expenses.

02nz
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Re: Preservation of capital at Age 93

Post by 02nz » Mon Jan 14, 2019 8:06 pm

SoonerD wrote:
Mon Jan 14, 2019 8:01 pm
The more remarkable part, to me, is he had a COLAd pension that perhaps started at $50k in the late 1980s and is paying 6-figures today. Letting 100m grow to a million is the easy part. So younger retirees with less than $1mm shouldn't feel bad, all you need is a pension that covers all your expenses.
OP probably has a CSRS (Civil Service Retirement System) pension, which has very generous benefits, and participants did not pay into Social Security. The pension hasn't been available to those joining the federal workforce since the 80s, I believe. The newer FERS is much less generous, but participants (and the gov't) pay into Social Security, and there's a match in the 401k-equivalent, the Thrift Savings Plan.

SoonerD
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Re: Preservation of capital at Age 93

Post by SoonerD » Mon Jan 14, 2019 8:10 pm

thanks for the info. it must have been the golden days for government employees.

Topic Author
ADAMNOGGI
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Re: Preservation of capital at Age 93

Post by ADAMNOGGI » Wed Jan 16, 2019 11:35 am

Oh Yes. All the days were golden. Mine included combat in WWII and Korea. Radiation exposure at Bikini nuclear tests in 1946. A service connected disablement award - tax free. Not worth it.There's more. :wink: We government employees had it made. No problems. I was drafted twice but Recruiting offices are open if you wish to indulge. :happy :D

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