I am settling my parents estates. One of the provisions is that I establish individual Trust accounts for the 4 grandchildren and that I act as sole Trustee until they each turn 45 years old (about 6 years from now). I have established the accounts and expect the funding to happen over the next 5 years (payouts from annuities to reduce the tax burden) and each account will be funded to about $220,000.I am looking for ideas/suggestions of reasonable conservative investments looking toward long term growth. I am starting each of them out with 100 shares of AAPL, and 500 shares of PPL from the estate assets. Thoughts please.themaj99
I think you are off to a great start. The grandchildren are presumably under 21. So you are looking for a portfolio that will grow steadily over the next 20 to 25 years but without the need for frequent trading.I would take a close look at industry leaders that seem likely to prosper long term. Ones that come to mind: Disney, Caterpillar, Boeing, Dupont, Deere, Monsanto, Google, MMM, Emerson, Union Pacific, Norfolk Southern, CSX.I'm a chemist. So I like Dow Chemical, PPG.A bit riskier, but with good potential: Polaris, Harley Davidson.And for the venturesome: Facebook, 3D Systems, Yelp, Linked In, Twitter, Tesla, Amazon, Netflix.Auto parts companies seem to be doing ok: Autozone, Borg Warner, Parker Hannafin.I like the idea of cherry picking a list like say the Dow or the S&P. Go through the list and try to own the best third while they are doing well.
until they each turn 45 years old (about 6 years from now). They are currently 39? There seems to be a typo somewhere.My thoughts:* 45 is too old to turn it over to them, IMHO. 'course, the trust is what it is. OTOH, how old will *you* be when they turn 45? And how capable/willing will you be by that time.* I did a similar thing with my parents & their grandkids. We set the it so that they got everything turned over to them at 35. By the time somebody is 35, their life is settled. They won't change much over the next 10 years. If they don't have their act together by 35, they won't have it together at 45.* It was a royal PITA. By the time each hit 35, I was very happy to get that task off my plate.* Actively managing several accounts for many years is a lot of work. Are you getting paid for your efforts?**** assuming your timeframe is decades and not merely 6 years *** Trying to pick long-term holds of individual stocks is darned hard and arguably a fool's errand. Have you been so successful in your own personal investing that you'd just do for their accounts what you've been doing in yours? My guess is no, otherwise you'd not be asking this question here.* This is what I would recommend.FundAdvice.com: "The ultimate buy-and-hold strategy"http://www.merriman.com/bestofmerriman/ultimatebuyandholdstr...
I suggest a diversifed portfolio of Vanguard ETFs or Vanguard mutual funds.The particular allocation should be determined by your (or their) risk tolerance, goals and time horizon.
I strongly, strongly recommend that you NOT try to pick individual stocks. And also that you include a healthy slug of short/intermediate bond funds (or ETFs). A simple mix of 3 or 4 Vanguard funds will do the trick. Then leave them alone.The couch potato portfolios are a good place for ideas along this line:http://assetbuilder.com/lazy_portfolios/
With $220K to invest, you can pretty well match the Dow or a core of the S&P, and get similar returns.Why pay expense ratios in this situation?
With $220K to invest, you can pretty well match the Dow or a core of the S&P, and get similar returns.Why pay expense ratios in this situation?-------------------------------------------------------------------No sense in limiting yourself to the Dow or S&P.Vanguard ETFs cost you less than $300 annually.
I am settling my parents estates. One of the provisions is that I establish individual Trust accounts for the 4 grandchildren and that I act as sole Trustee until they each turn 45 years old (about 6 years from now). At 45, if I knew I was receiving money in 6 years, first of all I would have an opinion on how I wanted invested. Second, if I didn't have an opinion, I would like prefer something like CDS or bonds because I would have concerns about losses.For myself, my son became the executor when he was 21. He's the youngest of the three and a unanimous choice. Teach.....your children well....
I second everything Rayvt said. Both our sons benefited greatly from the trusts left by their paternal grandparents. It wasn't a great deal of money, but it was enough to prevent them from going into debt to get advanced college degrees. They get control of 25% of the trust at 25 years old, another 25% at 30 and full control at 35. The older boy (27) hasn't bought a flashy car, much less bought a house or condo, using the trust for a down payment - even though he's working full-time now.That said, the trustee can make any decisions about turning the money over to the grand kids for whatever reason, depending upon the wording of the trust. If the wording of the trust hasn't been specified, consider adding some flexibility.PM
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