Message Font: Serif | Sans-Serif
No. of Recommendations: 0
The proposed portfolio sounds a little aggressive to me. She is drawing from the portfolio right now so at least some of it needs to be in a cash-equivalent investment (e.g. savings account, CD(s), money market account, treasuries, or other short-term guaranteed vehicles). Bonds do not count for this!

The expenses are waaaay high for that JP Morgan fund. For instance Vanguard Total Bond Market Index Fund only has a 0.22% expense ratio. 3.25% will basically eat almost your entire return - you'd be better off just saving in a cash equivalent.

There are asset allocations designed to be permanent out there. For instance you could look at some of the "target retirement 2005" funds and see what their allocation is. You could set up something in the ballpark of:
Domestic stock 20% to 45%
Foreign stock 0% to 10%
Bonds 40 to 50%
Short-term (cash equiv) 10% to 30%

$550 a month off a $200k portfolio is reasonable to expect. At a safe withdrawal rate of 4%, she could take out $666 per month, increasing with inflation each year.

Another option you should look into is an annuity. Given her age she could probably get a lot more per month from $200,000, if you left nothing to go to you and/or her other heirs. Or you could get an annuity providing $550 a month with part of the money, and invest the rest.
Print the post  


When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.