No. of Recommendations: 1
Author: sheilac101 Date: 9/21/01 11:32 PM Number: 31954
Okay, I was thinking of putting away a good amount of money for my parents retirement...they are in their early 50s and don't have much of anything put away for retirement...and they have done so much for me that I want to give them something. I want to put away over 30k for them now and let it grow for 7-12 years....

Very noble gesture!! But, make sure to spread it out over a couple of years to avoid the gift tax. You're allowed to gift $10,000 per year to each of them without any taxes.

I think that the Vanguard Total Market Index (VTSMX) mutual fund would be a great place for it, especially now that prices have dropped so substantially. Then, have dividends reinvested and leave it alone. VTSMX has one of the lowest expense ratios in the industry, and will match the total stock market. However, growth may be significantly lower in the next ten years than in the last. If it were me, I would expect no more than 8% CAGR (Compound Annual Growth Rate).

If you want to try for a higher return, you will also have to accept higher risk. You might want to try selecting 20 or so individual growth stocks using one of the methods outlined here at the Fool. Beware, though, that even though this approach has the possibility of outperforming the market, it could easily end up underperforming it as well.

Russ
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