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You wrote, But if you're game, my father-in-law called today. He is 87, and just sold his house (he's living with a daughter). He has a fat check and doesn't know what to do with it. He is terribly unsophisticated in finance, and will likely do whatever the nice fellow at PNC suggests.


What's left? He's not going to be a landlord, he's not going to own hard assets, he certainly won't be buying gold or commodities... He likely has between $200,000-$300,000 to put somewhere.

Your father sounds a bit like mine. He hasn't sold the house - though he does have a commercial rental (his old office building) he's been trying to sell. Most of his assets are in cash. The income from the rental goes into one of those savings accounts. He does have a small S&P 500 index fund. It's worth less than 10% of his cash accounts.

He's a retired insurance agent. The insurance company forced him out like 10 years ago because his business was declining and honestly he was no longer able to manage the business. They paid him a bunch of cash to transfer his clients to another agent. He also converted his Keogh account into an annuity. Between the annuity and SS, he has enough to pay all of his current expenses, but has no idea what to do with the cash.

I suggested that he might want to buy some high quality munis with some of it. He wants to know why? I said because he can do better than a 1% APY (part of the money is at ING Direct). He said, "I'll never use it. You kids will eventually get it all. What do I care?" (He might not have said it exactly like that.)

My girlfriend pointed out to me that: 1) we (myself and my siblings) may never get it, 2) he or his wife may need the cash to pay near end-of-life expenses, 3) worse, they may exhaust it when the first one goes so we might get stuck helping to support the other, and 4) by letting it sit, he's losing purchasing power. Of course getting my dad to think about it that way is likely to be a process. And I don't talk to him regularly, so who know if or when he might do something about it.

Personally I think that at his age, a conservative, balanced fund and/or some mix of conservative investments like high quality munis makes a lot of sense. He should be positioned to preserve capital, minimize risk and maintain buying power with a little bit held aside for growth. Letting several years' worth of cash just sit in a savings account is crazy because its losing buying power - something you might need in your last few years.

- Joel
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