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I posted this on another message board previously, before I found this board which I think will be more relevant.

To all who espouse foolish wisdom:

My mother recently received a collection of stocks, funds, bonds, etc. from a passing relative, which was sad, but left my mom with a small nest egg that she and my father were never able to save themselves. Mom put everything in a safety deposit box, and there it sat for the last two years.

Recently, being completely unknowledgeable in trading, stocks, etc., she contacted a local broker (full service - the ones who make their money the old fashioned way). He set up an appointment with her, told her he would take her to the bank where she could get the certificates out of the safety deposit box and turn them over to him, so he could invest them for her. She didn't like the idea of turning over her certificates so she cancelled the appointment and called me to find out if that was normal. I said yes, but don't let him have them until I can review this with her.

Whew - dodged a bullet there. She's coming to see me next weekend (Father's Day) and is bringing all the info with her. She's looking for some advice, and now so am I.

Information - Mom is 60, Dad is 65. He still works, plus has a small military pension. They make enough so that they can live within their means - although they don't always do so.

From what my mom told me over the phone, roughly 2/3 is in stocks and the rest in mutual funds mostly of the bond or t-bill variety, and a few utilites. The stocks are split between Exxon and Wells Fargo. They've been using the dividends as supplemental income. The mutual funds have provided very low returns (3-6%).

My first inclination was to tell her to keep the Exxon and Wells Fargo, dump everything else and put the money in an S&P 500 fund, or maybe even the Foolish RP4. However they're looking at their twilight years with this as their main savings, and I don't want to lead them down the wrong path

So what does everyone say? Am I far off? Has anyone else had a similar experience? Give me that foolish stuff.

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I inherited some AT&T and Southwestern Bell from my mother 10 years ago. I foolishly sold it and managed to half the value before I discovered the Dogs of the Dow. I would have been much better off to have left it alone.

I would recommend the Foolish Four. I am semi-retired ( working full time but for a sort of volunteer position) and about 1/3 of my retirement is in FF, 1/3 in SPY & DIA and 1/3 in stocks. I am sofar happy. I am 61 and a retired Engineer.

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My situation is the same, but different. I am the recipient of a portfolio of stocks. Most are Baby Bell hand me downs and the rest are utilities. I need guidance on where to go with all this. I've recently invested in Schwab 1000 and the new Schwab Index fund.HELP.
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I am the recipient of a portfolio of stocks. Most are Baby Bell hand me downs and the rest are utilities. I need guidance on where to go with all this

I also inherited AT&T and all it's babies. I would not let the trust sell any of it when they wanted to "diversify" the trust holding and believe me I'm glad I stood my ground.

There's a good chance all that will go into my estate. Those stocks are still good and will probably be so into the future. My cost basis on them dates back to 1986 so there's a huge capital gain. Most of them pay good dividends and I don't have any reason to sell.

I don't know about the utilities. Follow the Fool philosophy and don't sell just because you think you need a change. Study them as you would if you were planning to buy them and you may find they look like keepers.

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I think your first inclination is good.

Glad you told your parents ages. Your parents are looking ahead to their "twilight years" - but you realize they probably have 1/3 of their lives ahead of them.

Keep in mind that the older one becomes the greater their life expectancy. People today can expect to live into their 90's - and some beyond that... Your parents could live another 30 years plus or minus. That is long term investing and they should plan ahead, keeping inflation in mind, so they won't outlive their money.

My father died recently at 92. He had lived through the depression and was afraid of the stock market. He put most of his savings in government bonds. Sadly, he did not outlive his money. One of the most difficult things in his life was when he had to ask us for financial help.

My husband and I are 69, and we have been keeping 50 to 60% in stocks and about 40 to 50% in Money Market, CDs, bonds, GNMAs. We are conservative but hopefully our money will not only last longer than we do but we'll be able to leave some for our children.

Have you pointed your parents to the Motley Fool books and do they know about Investment Clubs? I started my education in an NAIC club at age 63. When I was your mother's age I knew nothing about investing. We had turned all our life savings over to a full service Financial Advisor. (BIG MISTAKE) Once I started learning - I've found it not as difficult as I'd believed - we've booted our broker and I'm now in complete charge of our investments. Your parents could do that, too!

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I am retired and run my own securities portfolio. Here are my thoughts on the subject.

DO NOT MAKE ANY CHANGES IN HASTE. Take your time evaluating the portfolio your parents have.

Start with the poorest performing items. Look for new investments which provide income as well as safety. Diversify the portfolio. Look for some ration between stocks and bonds. I favor a higher ratio of quality stocks. Also diversify the industry groups. I would suggest that you do your own research. What you learn can be used in helping yourself as well as your parents. DO NOT allow the stock broker to take care of the portfolio. You can leave the securities in street name at the brokerage house, use the broker to execute the trades, use the broker to get opinions, but the final decision is yours and the broker does nothing unless you give him instructions.

As an example, I am retired and run my own securities portfolio. My stock portfolio has over 30 stocks, all paying a dividend and covering a broad spectrum of industry groups. I prefer owning a small quantity of many stocks, opposed to a large quantity of a few stocks. All of the stocks, except some REITs, are a part of the S & P 500. My major groups are 1. major oil companies; 2. telephone companies; 3. drug companies; 4. regional banks. There are also other groups. I keep all of my securities in street name at a full service brokerage. Since may trades are few, I have to pay a full commission. But there are other benefits. I can view my account over the internet, I have check writing privileges with overdraft protection. Both of these services are not subject to any fees. I can get the brokerage house research reviews over the internet. All dividends are collected by the brokerage house and swept into a money market fund. I get a comprehensive year end account summary and when I do my taxes I only have one dividend entry instead of 30. These services, IMHO, outweigh the cost of the full commission.

The other portion of my portfolio is in Muni bonds. Here I have built a 12 year ladder, with a portion of the bonds maturing each year. I buy the bonds when they are issued and hold them until maturity. The ladder allows interest rate averaging. The income from the bonds is both federal and state exempt.

Also, since you are reviewing finances with your parents, it might be a good time to bring up other necessary items. Do they each have a last will and testament and are they up to date. Remember, if they have no will, the court will have a say as to the distribution of their estate. The court will appoint an executor, who most likely is a friend of the judge and looks for ways to drain the estate into his own pocket. No one likes to talk about or to prepare a will. But it is absolutely necessary if your parents want to have a say into the distribution of their estate.

Another item is to do an evaluation of their total net worth and see if they could be subject to estate taxes. If the value is approaching $600,000, their estate is getting close to being subject to this tax. One of the easiest things to do is to make sure of the actual legal ownership of their assets. Make sure each parent makes use of their individual exemption. This will give them a $1.2 million exemption from estate taxes. Remember, their house and the cash value of life insurance policies are included in the estate valuation.

"If you are looking for a helping hand, you will most likely find it at the end of your own arm."

I hope my thoughts are of some help to you.


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A lot of good advice above.

When you use a broker--any broker, make sure you read the account statements when they are received. If there are any unauthorized trades on your account, make sure you call them to their attention.

Unauthorized trading, even cancelled "mistakes", is one way they identify the accounts that can be manipulated. Beware!!
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>Not quite sure how to use these boards to best advantage, so I hope this reaches: Retired 121.
>I am 66, retired and now hold a total of seven REITs.
It is my intention to hold them 'forever' as income supplements. They average 13.8% dividend return on my investment. It puzzles me that REITs aren't discussed as long term retirement vehicles.
>If you are amenable, I would like to compare notes and strategies.
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