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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76418  
Subject: Re: Investing Lump Sum Date: 4/14/1998 5:15 PM
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Greetings, Cardioman, and welcome.

<<My 68 year old mother, widowed for 17 years, is finally selling the family home on LI NY. She has been living almost exclusively on SS and a small $40K life insurance reserve (in an AmExp account) from my dad where the principal is now being tapped. My mom is healthy and active but the house is just too much work to consider a reverse mortgage.

Any suggestions/comments on how best to handle a $120K investment to provide a lifetime of income. She plans to rent an apartment while she waits for HUD subsidized housing (where there are strict income guidelines), probably another 2 years.

Money market funds return next to nothing, so I am considering some kind of Index Bond Fund to provide monthly income but am worried about the risk, say 5 years from now. A conservative Balanced Fund could provide quarterly income.

I have been looking almost exclusively at Vanguard Funds. I am reluctant to inquire with her financial advisor at AmExp because of the 5% hit he takes. I don't think this is "rocket science" but I am looking for other alternatives.>>

I don't often recommend it, but when dealing with the elderly living on limited resources sometimes I do. This is a classic case where you mom should see a fee-only Certified Financial Planner (CFP). On the sale of the house there will tax issues involved. Her basis is probably quite small, meaning at least 20% of the gain will go to the tax man. What's left must be invested to provide some growth as well as income. And you have the HUD subsidized housing qualifications to consider. All that means she needs some UNBIASED advice, something she can't easily obtain from an AMEX financial advisor working on commissions. A fee-only CFP just looks at the issues and makes recommendations based on what best fits the circumstances.

For a couple-three hundred dollars, IMHO it will be money well-spent.

Regards….Pixy
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