hello all. I am new to this board and just wanted to get a little insight on retirement plans. My father is 50 years of age and has been scared to invest in the market since black monday in 1987. He lost $30,000 to margin calls. Recently he has trusted me with his nest egg since I have been doing okay in the market. He has about $50,000 cash and would like to invest this money long-term (12-15yrs) for his retirement. My question is, what suggestions do you guys out there have for him to do. Should he buy a solid tech fund and hold, solid stocks (csco, orcl, etc), something riskier. Any insight would be appreciated.
From the few details you gave the board about your father's skittishness regarding the stock market, I would advise you to put his funds into a solid balanced fund such as one of Vanguard's Life Stragegy funds, say Growth or Conservative Growth. Put the money in and don't look at it for several years. Leave it alone. I know that many on these boards are rabid about picking stocks on their own, but from what you wrote, I think that a diversified fund of funds would do very nicely for your father over 10 to 15 years. Certainly better than a CD in that time frame. Try to get him to contribute on a dollar averaging system every month or quarter or every January 2 to a retirement vehicle such as an IRA. I have been using the Growth Life Strategy fund for my college age son who is probably one of the few college kids who is indifferent to investing but has been pleasantly surprised by the steady ascent of his fund balance over the last three years. Not spectacular, but solid.Janus Funds also has a good balanced fund, but for starters, the Vanguard Life Strategy funds are solid for those who are anxious, indifferent to investing, or too preoccupied with other life issues to mess around with investing. Go to the Vanguard site for further info.Good Luck. CA
Hi:For what it is worth, here are a few suggestions for investing with a 15 year time horizon.1. I believe the core holding should be in a no load index fund based on the S & P 500, such as Vanguard Index 500. Over the long haul, few actively managed funds out perform the Index.2. Given the long time horizon, if you want to swing a little, you might consider buying a few shares of the Nasdaq-100 Index Trust. These shares trade on the Amex under the symbol QQQ. The shares are based on an index of Nasdaq's largest non-financial companies. This index actually has outperformed the S & P 500 over the last 15 years. What I like about this one is that it will give you a play in most of the big name tech stocks like Intel, Microsoft, Oracle, ect. and also give you a fractional interest in Yahoo!, Amazon.com, JDS Uniphase, ect. I believe at this point some of these stocks will be home runs but it is impossible to quess which ones, so buying a basket containing a number of the better names is the way to go.I would keep a little cash in a money market fund...maybe 5%.Also, starting in about 10 years, I would reduce the stock holdings of the portfolio by 10% each year for five years, replacing the stocks with Treasuries of 5 years maturity. Year 10, sell off some stocks and buy 5 year treasuries; year 11, sell same amount of stocks as the previous year, buy 5 year treasuries.This way, 15 years from now, your dad will have a diversified stock portfolio and a bond ladder to generate income and will have reduced the risk each year for five years as he moved closer to retirement.Good luck
Not to slam of flame anyone, anything outside an S&P index fund is heresey ;)."sBasically, at 50, your father could live another 35 years if he's in good health and a good family history of longevity. His greatest fear shouldn't be the stock market risk but inflation, this is more likely to eat into his nest egg over the next decade than any market down turn.ANY stock investment is not conservative, but some are less "speculative" than others. Peruse the workshop screen sight and screen explanations and look at what you understand and would be comfortable with using. For someone that sounds a little conservative I'd suggest the BSP5 (Beating the S&P, a variant on the Foolish Four) and Keystone 100 Top 5 (a growth oriented screen that primarily picks large caps). This would create your own "mutual fund" so to speak that you are in control of. For a sleep comfort factor, you may keep 5% in cash/cash equivalents.JLC
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