dbA few thoughts on your mom.First, in deciding about stocks and bonds (and cash), you should be thinking about her expenses and how much income she will need (including social security, if any) to sustain her, factoring in inflation, long term care insurance, etc. I'm guessing she won't come close to spending down half of her savings over the next 10-15 years, so having 50% in a conservative stock fund, such as the Vanguard Total Market, makes perfectly good sense, in case she lives even longer or to take advantage of the inheritance provisions in which her legatee gets a new tax basis for stocks (the system is rigged so stocks could return significantly less than bonds between now and when she dies and her inheritors still do better). I'm afraid most of those giving advice come up with generic answers (such as the elderly staying away from equities) without paying attention to specific circumstances. If she were younger, I'd actually be more cautious. But if she has good medical coverage and her house paid off, her expenses can't be very high at this point. I know my in-laws, who are a little younger, spend considerably less than we do, and we're very frugal.On the bond thing: Treasury of high grade corporate individual bonds are less risky to principle than bond fund right now, if you never sell the bonds. If you do sell the bonds, then you have risk to principle. I don't know why so many of the bond advocates think in terms of living off of the income—most folks will never have that much in income producing assets and will eventually have to use the principle, which means selling.Obviously, the broker won't suggest options that don't involve commissions, but if it were me, I'd be thinking about a CD-ladder and/or EE bonds for about half the money, with about half in the Total Market Index Fund (and to he!! with the REIT, which has been too hot for my taste). Without knowing her expenses, it's hard to be precise, but I'm guessing a CD ladder with $425,000 would take her 15 years or more to spend down (roughly the same with EE bonds), especially if she's also got social security. That leaves the stock fund for her inheritors, and you can always do a rebalancing thing by selling some of the stock fund, instead of CDs, over the next few years, if the cash starts looking too low. There's a lot to be said for cash (and Savings Bonds)—there's no hassle, no being called in, no having to buy or sell, and if you ladder, the interest you get is in the ball park with intermediate treasuries and high rated corporates.
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