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I am selling my mother's house and expect to get around $60,000 for it to finance her stay at an assisted living home. The cost to stay at the home is $1300 per month and she gets only $500 per month SS. What's the best way to invest the proceeds from the sale of her house to attempt to cover the remaining $800 each month without exhausting the entire $60,000?
Stocks or Mutuals but short-term cap. gains? Short term T-bills or bonds? CD's and/or money markets? Show me the way. Thanks
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SonHelp asked..

"I am selling my mother's house and expect to get around $60,000 for it to finance her stay at an assisted living home. The cost to stay at the home is $1300 per month and she gets only $500 per month SS. What's the best way to invest the proceeds from the sale of her house to attempt to cover the remaining $800 each month without exhausting the entire $60,000?
Stocks or Mutuals but short-term cap. gains? Short term T-bills or bonds? CD's and/or money markets? Show me the way. Thanks "

I wish I had better news.

To generate $800/mo ($9600/yr), you'd need to get a steady return of 16% (9600/60,000) which is not going to happen with CD's, T-Bills, or other low risk investments. Higher returns of stocks is too risky for this and to get a steady 16% with any investment is pretty close to impossible.

If you can invest the $60K in CD's at 6% and you take out $800 per month, then the $60K would be whittled to zero in 7 years and 10 months.

I hate mentioning it but you could look into a single payment annuity to see what they'd payout. Of course, with such an annuity, there would be nothing left at her death. A lot depends on your mother's age and her life expectancy.

I wish the news was better. If I can be of any other help, you can email me.

BGP

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<<<What's the best way
to invest the proceeds from the sale of her house to attempt to cover the remaining $800 each month without
exhausting the entire $60,000?>>>

Much depends on your mother's age/life expectancy, but in just about any instance, it's not going to be easy.

You need $9600 per year. Being conservative and laddering 5 years worth into CDs, or $48000, that would leave $12000 to invest elsewhere. This amount isn't large enough to throw off money to replace your yearly costs, unless of corse you're able to double your money every year. Therefore, I'd probably keep it all in CDs.

Another option, invest the 60k in stocks and with a 5% drawdown would generate around 3k/yr or $250/month and you come up with the extra $550/month. In about 5-7 years, the investments might be throwing off $500/month and you'd half to come up with $300 and maybe by 10-12 years it'd be able to generate it all.
This later approach is obviously more risky. But if your mother in younger, 65-70? and in relative good health, she could live 15-20 years and you'd have to take a little more risk so as to not outlive the money, or outlive as quickly. If she's older and in poor health and not expected to live more than 5 years, be conservative.

JLC
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I have another idea. It is not for most and may not be fore you. My father has had rental properties for years. He does not like it for a few reasons. One all his houses are hundreds of miles away from him. Two he feel he has to deal with everything hands on. I have learned that there are better ways to do things.

Don't sell the house. Rent it out. Without knowing much about the house or the area I'd have to just quess at how much you could rent it for but lets say you rent it out for $600 a month. If you don't mind being hands on you coul dtake that and use it to cover the costs you need. All right it is not the $800 but I'm trying to get you closer that those CDs. Now my advice if you have never had to deal with renters is at least to start let a realestate agent manage the rental of the house. It can cost around $50 to $75 a month, and ask then if they have heard about insurance that covers things like stoves and hot water heater. I found out from my agent that there is insurance that covers things like the stove incase it needs repair or replacement. This means you don't have to try and find a few hundred $ over night because the hotwater heater flooded the basment. I hope this works for you I'm a few year if not month from the samething.

Best wishes
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