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Author: Gavinski Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19257  
Subject: Mom's Investment Date: 1/1/2000 5:23 PM
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My mother is 73 and is living comfortably off her social security and retirement. She has sold her home and wants me to invest $240,000 for her. It is likely she may need a nursing home in the next 2-4 years as she has a progressive condition.

I have been advised to place 2 years cost of a nursing home into a money market account and place the remaining into a total stock market index fund (50%) and a total bond index fund (50%).

Any other thoughts out there would be greatly appreciated. My primary concern is to have her resources available to her for a nursing home when the need arises and I am wondering if the above scenario is too risky.
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Author: rjm1 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1232 of 19257
Subject: Re: Mom's Investment Date: 1/1/2000 8:36 PM
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My mother is 73 and is living comfortably off her social security and retirement. She has sold her home and wants me
to invest $240,000 for her. It is likely she may need a nursing home in the next 2-4 years as she has a progressive
condition.

I have been advised to place 2 years cost of a nursing home into a money market account and place the remaining into
a total stock market index fund (50%) and a total bond index fund (50%).

Any other thoughts out there would be greatly appreciated. My primary concern is to have her resources available to
her for a nursing home when the need arises and I am wondering if the above scenario is too risky.


I consider the 50% in bonds to risky.

You do not mention how much she will need over SS & pension. I would look at this income as if it came from a fixed income portfolio. The two years MM is good. I would put the rest in several inxed funds or QQQ , DJI , SPY etc. If you feel that is to risky up the money market cash another year or two. Read up on safe withdrawl rates. See the retire early home page board. http://boards.fool.com/Messages.asp?id=1380025000284000

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Author: ibnana Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1233 of 19257
Subject: Re: Mom's Investment Date: 1/1/2000 10:17 PM
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I consider the 50% in bonds to risky

I agree with rjm1 on this. I would never touch a bond fund. It is not the same as holding individual bonds. You can lose your principal just as readily in a bond fund as in a stock fund. Unfortunately many people hear "bond" and think the principal is safe, but if interest rates have changed and you need to cash out of a bond fund, you could lose money. If you buy individual bonds and hold them to maturity, you would not lose any principal if you get good quality bonds. You can also buy them with laddered maturity dates so they do not all mature at the same time.

I'm not promoting buying individual bonds with "Mom's Investment", but wanted to point out the risk in a bond fund.

Carol

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Author: mee2 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1235 of 19257
Subject: Re: Mom's Investment Date: 1/2/2000 12:21 AM
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The suggested distribution of your mothers assets is not too risky in my opinion. Nursing Homes can be expensive, have you looked at Assisted living? Also not cheap but a better quality of life that may put off the dreaded nursing home senario for some time. Also additional help in the assisted living area maybe cheaper than the nursing home, again with better quality of life. If you thing she is going to be needing this in the next few years start looking at facilities NOW so you will be prepared and have a feel for those in your area or her area, now thats another choice problem. If you do any amount of investing on your own you might take a little of her money and see what you can do with it in terms of rate of return.Good Luck.

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Author: rvbradish Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1238 of 19257
Subject: Re: Mom's Investment Date: 1/2/2000 11:08 AM
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Hi, Gavinski:

While I cannot presume to advise you on what YOU should do, if I was in exactly the same position I would place about $12,000 in each of 20 different stocks. That's enough to qualify as your own (her) personal Mutual Fund, so to speak, and would eliminate the management Fees which you would otherwise pay. Of course, that would place the onus of selecting good growth stocks on you. To get you started, I would suggest CSCO, SYMC, EMC, KLIC, INTC, SSW, XLNX and NT for your consideration. Except NT (which I will be buying Monday), they have all been excellent stocks for my Portfolio. Others also, but I consider these ones to be my Core holdings. For what it's worth, I'm 69 years old, and consider myself a conservative investor.

Ray

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Author: SukyP Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1239 of 19257
Subject: Re: Mom's Investment Date: 1/2/2000 12:14 PM
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You might want to look into an annuity for your Mom for part of the money. It would pay a lot more than a money market I believe.
Re assisted living, one thing you have to investigate and be cautious about is their claim that if your Mom needs nursing care that they can handle that.
Good luck

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Author: mdorsey One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1247 of 19257
Subject: Re: Mom's Investment Date: 1/2/2000 4:07 PM
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No, No annuity. High fees and restrictions. 2 years in a MM is good. Nothing wrong with 50/50 on the rest. You do not have enough bond money to buy individual bonds and diversify. Yes bond funds can go down when rates go up, but they also can go up when rates come down.

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Author: sam47young Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1259 of 19257
Subject: Re: Mom's Investment Date: 1/3/2000 10:55 AM
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my mom just entered a nursing home also and she has watched with growing interest as her son (myself) begins to aquire a computer(Dell), begins to do stock/mutual fund research, & has started to rearrange some of her investments (with help from her broker). at the risk of sounding goulish, her misfortune has opened a new world for me & it may result in benefits for her, too. do you have any tips on how to present new options to my mom as to how she could redistribute her holdings into areas more profitable?

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Author: matratra Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1263 of 19257
Subject: Re: Mom's Investment Date: 1/3/2000 11:37 AM
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This fool believe, you can place your 50% in money market at current highest rate of minimum 5.71% at Capital Crossing Bank in Milwakee, WI or(Boston Branch) & anothe 50% in ZERO COUPON BONDS. Please stay away from market for the sake of your mother. Again, this your money. Best of luck. Mat

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Author: 1sharpcookie Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1264 of 19257
Subject: Re: Mom's Investment Date: 1/3/2000 11:39 AM
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I am surprised that no one has mentioned looking at what the Fools have to say about mutual funds (nothing good.) Whoever "advised" you to put *half in a stock...and half in a bond mutual fund* almost certainly stands to earn a hefty commision on your mom's money.

Take some time to become familiar with the entire Fool site. Read about mutual funds. Read about discount brokers. Consider putting at least a part of the money into a few stocks that you research and decide to buy. It isn't all that hard.

Good luck. You have come to the right place to find all the answers and information you need. There's no need to rush. I know you can do it!

Chris

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Author: Berdley Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1265 of 19257
Subject: Re: Mom's Investment Date: 1/3/2000 11:58 AM
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Gavinski:

You might look at zero coupon bonds with staggered maturities over the next few years. In other words buy maturities out for, say five years, then roll each over as the need arises. You'll get a guaranteed return of your money each year to pay expenses - any surplus over and above these needs can be reinvested in the next zero.

Berdley

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Author: DoktorDi Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1270 of 19257
Subject: Re: Mom's Investment Date: 1/3/2000 1:11 PM
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<<You might look at zero coupon bonds with staggered maturities over the next few years. >>

Here's a web site that gives you banks and rates:

http://www.money-rates.com/secondary.htm

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Author: harveyo Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1271 of 19257
Subject: Re: Mom's Investment Date: 1/3/2000 1:27 PM
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congratulations on taking charge of a most important decision to protect your Mom by investing half of her funds in an investment.

I helped my Mom a few years back by investing some Cash for her in CD's @ 12 1/2 percent for 2 years. I wanted to do 5 and she wanted 1 so we compromised. The year was 1984 when my Father had passed away.

My advice in today's climate is to ignore Bonds and put the total of 50% of her 240K into the stock market with half going into a market index fund and the other half into something like a Fidelity Tech Sector fund. Technology stocks will continiue to do well in this market and Fidelity has some of the best at reasonable or even no load rates. I think bonds are far to risky in an environment where interest rates could easily go up and the Principal go down.

Good luck with your decision. If it were your own funds being invested, I would consider putting half into individual Tech stocks after doing your due dilligence.

Harvey @ Tualatin, OR 97062



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Author: mequonwj Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1272 of 19257
Subject: Re: Mom's Investment Date: 1/3/2000 1:35 PM
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I would not put 2 years income in a money market the rates are too low. Instead put most of it in short term (1-2 year) AAA corporate bonds. The short term will monimize principal fluctuations due to interest rate changes and the term corresponds roughly with when you'll need the money.

Wanda

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Author: DHR7022 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1279 of 19257
Subject: Re: Mom's Investment Date: 1/3/2000 3:53 PM
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I would suggest a good quality Growth/Income Mutual Fund such as American Funds Washington Mutual. The fund has an excellent track record for growth and much better income than from a money market account. Access to such funds is almost immediate, near the same as money market accounts.

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Author: AmPalone Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1283 of 19257
Subject: Re: Mom's Investment Date: 1/3/2000 5:41 PM
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Having never posted before, I'm about to plunge in; if I can be of help. I don't know what state you're mom is in, but depending upon where she is, the nursing home costs can vary considerably. In addition, depending upon her condition, that factors in to the cost. My dad had costs of upwards to $80000 per year, living in New York, had having a progressive debilitation of Parkinsons. So of course, you can invest her 240K agressively at say, 75% Equity/25% bonds but the point is: for how long will that last? No one can tell "when" but have you thought of the 36 month look-back period that allows Medicaid to kick in when resources are depleated? This 36 month time frame has reprocussions. I'd rather not go into the details here, but you should check with an ESTATE attorney in order to make the accommodations necessary. So its not just what vehicles you plan to invest your mom's 240K--its what account names etc...that comes important down the line.


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Author: paidup Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1285 of 19257
Subject: Re: Mom's Investment Date: 1/3/2000 7:10 PM
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Your mother may and can live a very long time. with modern medicine and tech wonders happening all the time. i am sorta retired. i have a mother that i take care of. i only recently discovered the great benefit of individual investment stock choices. the 20 stock choice presented before is so much better in return compared to mutual and bond funds. You must really thing long term. Please realize that i am a totally a non professional but mutual funds do lag individual stock picks. best for your mom. robert

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Author: paidbillsiii Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1287 of 19257
Subject: Re: Mom's Investment Date: 1/3/2000 7:52 PM
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First, determine what her net income needs per year are(total income - total expenses). Then put what is needed into fixed investments, ie, 1 year, 2 year, 3 year, out to 5 years(CD's or T Bills) so that they mature each January for the next 5 years. Use about 20-30% of her assets.

Second,place the balance into Blue Chip Growth & Income stocks, say drugs, insurance, consumer staples, etc. That's about 60-70% of her assets.

Third, take about 12-24 months to invest in the stocks at step #2. For example, 60% of $240,000 is $144,000, that's $6,000 per month @24 months. So, put $72,000 in a one year CD and $36,000 in a 6 month CD, and $18,000 in a 3 month CD, and $18,000 in a Money market( so you can invest $6,000 a month)

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Author: mdorsey One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1288 of 19257
Subject: Re: Mom's Investment Date: 1/3/2000 8:11 PM
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The problem with zero coupon bonds is that unless they are in a tax deferred account you must pay income tax on the implied gain though you don't really get any gain till you sell or the bonds mature. There was no mention of Mom's money being in a tax deferred account.


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Author: mdorsey One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1289 of 19257
Subject: Re: Mom's Investment Date: 1/3/2000 8:22 PM
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Ampalone, it sounds to me like you want this money managed for the estate instead of Mom. As well I don't mind my tax money being used for truly needy Medicaid people but, I would object to Mom giving away all her money to the kids and then claiming need.


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Author: NYPDRAYG Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1301 of 19257
Subject: Re: Mom's Investment Date: 1/4/2000 5:23 AM
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I know you love your mother, I just put mine to rest this week. But just think of the home burning up all of your mothers funds. Medacade will fund the home expense as long as your mothers funds are less than 2 to 3000 cash and stocks. so get the money out of ypur mothers name NOW. Medacare goes back three (3) years. less that that and it will cost you 7000 a month for the home till the value of your mothers estate burned up. so # l see a SENIOR CARE LAWER COST 500 its worth it he will draw up POA and tell you the legal means how you can save your mother's funds. Your mother as of this year can gift more than 650,000 it used to be. This is a twoway street you have to trust each other as we age it's very hard to let go of your money but if she don't the home will get it all in the end at 7000 + a month new to this W/O a retype ihit some badkeys above hope you have good luck,but a old age lawer will save you a lot.

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Author: rvbradish Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1304 of 19257
Subject: Re: Mom's Investment Date: 1/4/2000 2:33 PM
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"Please stay away from market for the sake of your mother."

Bad advice from an amateur. Statistics have verified that the MARKET has made better gains than any other investment over history. But the market DOES have risks. AND SO DO BONDS, as well as Money Market Funds. And so does crossing the street. Take your time, exercise your common sense and invest wisely. Read and heed the Motley Fool's school and all pertinent information on these Boards.

Ray

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Author: mepiper One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1305 of 19257
Subject: Re: Mom's Investment Date: 1/4/2000 8:19 PM
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Hold on, this is my money and every one elses you'er talking about. Her mothers money is for HER use not to break the law to keep it for oneself. Tax payers pay for medicaid and we have worked hard and will help those in need through no fault of their own but by golly if i see someone cheating the system i WILL report it, the system is US.!!

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Author: mepiper One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1307 of 19257
Subject: Re: Mom's Investment Date: 1/4/2000 9:35 PM
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SORRY ! My orginal post about Mom's Investment was directed to AmPolone POST#1283, who was preposing a sham, NOT to the orginal writer who asked for advice on how to handle the subject with his mother, whom i felt was sincere in his question. Sorry i should have more clear.ZAK [mepiper]

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Author: mepiper One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1308 of 19257
Subject: Re: Mom's Investment Date: 1/4/2000 9:45 PM
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OH BOY!!! I goofed big time again----my original reply was to post#1301 NYPDRAYS, not AmPlone, I am so sorry AmPlone, i guess i'm to tired to do this. Good Night mepiper

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Author: swatts13 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1312 of 19257
Subject: Re: Mom's Investment Date: 1/5/2000 11:08 AM
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As a new Fool, I have never posted to the Fool boards before, but am in a similar situation as Gavinski, so I thought I'd jump in with my 2 cents. My mother is 77, in fair health, has just sold her home, and wants me & my brother to advise her in investing about $200K.

I am suggesting that she put 45% in individual stocks (GE, HD, T, PFE, RAD, BLS, HLT), 20% in Technology stocks (CSCO, EMC, QCOM), 10% in an international stock mutual fund, 10% in a bond mutual fund, and 15% in Money Markets/CDs.

She currently does not need to pull any cash out as retirement & social security are sufficient. However, she will probably need to begin pulling out about $10K/yr in 1-2 years for Assisted Living facilities. She's in fair health now and living with my brother.

The most difficult part right now is coming to agreement with my brother on what to invest in specifically.

I wish you well in your efforts for your mom!

Best Regards,
swatts



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Author: rvbradish Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1314 of 19257
Subject: Re: Mom's Investment Date: 1/5/2000 11:23 AM
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Hi, swatts:

I'd suggest that you and your brother agree initially to invest 5% of the total in each of 20 different securities. Then, each of you nominate 10 of them and invest the funds accordingly. No reason for the two of you to come to blows over any possible disagreement. But I WOULD forget about the Mutual Funds. After all, with 20 different holdings, you have, in effect, created your OWN mutual fund. The figure "20" comes from my philosophy of investing no more than 5% of my total in any ONE investment. (After you have made her initial investments, you and your brother might also agree to meet again after a year to review the investments.)

Good luck,

Ray

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Author: jeBrowning Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1334 of 19257
Subject: Re: Mom's Investment Date: 1/5/2000 5:13 PM
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One thing you can do that most people overlook is give all or some of the money to a nonprofit--a college or other organization that you are comfortable with. Here is how it works. At age 73 she can get a guaranteed return of about 7.5% plus the deduction over several years for the gift. PLUS, she can designate you as the receipient after her death and YOU get the same rate of return for your lifetime. Upon your death, the total then goes to the organization. The beauty of this is that the deduction gives your mother lots of real income now and you can wind up with an income stream for your old age. This strategy works especially well for only children.

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