I suggested 50% equities and 50% in something more secure, so I put 50% in VFINX and the rest is still sitting in the money market. I'm thinking the rest should go into some sort of bond fund, but I don't even know where to begin with that and I'm having difficulties finding information on the Fool.I have already read "Four Pillars" by Bernstein, and this is the equity/bond allocation I have in my portfolio right now: 80%/20%. I am in the same age neighborhood as your folks. I would suggest at least 20%-25% in bonds at this time, at their age. Now for the not-so-good news: Most people would agree that interest rates will rise from here on in. That means that the price of long term bonds will drop in the future, and they will be 'locked-in' to a low interest rate. Laddering T-Bills can be effective, but I find that a hassle. If they buy a bond fund, long-term bond funds will also lose value in their share price--you don't want that. Basically you want to go with bonds that have less than a 5 year maturity. I am going with short and "limited-term" bond funds. I am holding them in taxable accounts, but you don't have to go with non-taxable funds since they'll be in a retirement account. You should be able to find short-term bond funds in any of the fund families you're familiar with (i.e. Vanguard). If interest rates rise in the next 10 years or so, you can start moving incrementally from short-term bond funds to long-term to take advantage of the higher rates.Finally, they have a significant amount of money sitting in a low interest savings account that they don't plan on using anytime in the near future. I was thinking of opening a general trading account and using a similar allocation as mentioned above. Is this a good idea or should I suggest that they put it elsewhere?I would first make sure that they have an emergency fund of at least 12 months expenses (as you get older, you tend to remain unemployed for longer periods of time, and there's more likelihood that an 'emergency', such as an illness or disability might arise).After the efund is established, I would ask your parents how much money they are willing to devote to 'playing'. I 'play' with a trading account, but not with more than 5% of my total portfolio. Are your parents willing to devote the time and attention it requires to trade in individual securities? If not, then a trading account is not for them. They would probably be better off opening a brokerage account with Fidelity and using it to purchase mutual funds, or opening several mutual fund accounts at Vanguard (since Vanguard treats each mutual fund position as an 'account').The MOST IMPORTANT thing is that you must treat all of these accounts, whether held by your mom or dad, as if they were ONE portfolio. Your portfolio allocations should be made from that perspective. It will be more difficult due to the constraints of the 401K investment choices, but it can be done. It will require 'spreadsheet' expertise (probably by you). ;-)They are lucky they have someone like you who has their best interests in mind to help them. Good luck!2old
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