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A close friend of mine asked me to help him with his Mom's's the situation:

Existing Portfolio:
IRA at Edward Jones (Un-Foolish) $19,000
Investment account (Jones) $43,000
TOTAL: $62,000
Mom is 72 yrs old...the IRA is all in various Putnam Mutual Funds. The investment account is split...
$22,000 in Home Depot stock (bought 1997) and $21,000 in Putnam Mutual Funds. Additionally, mom just came into $100,000 that she wants to invest and live off.
Her only other source of income is her social security but her expenses are nominal as she lives with her son.


Should she liquidate the Putnam Mutual Funds for an Index Fund? I was thinking of recommending the Conservative Retirement Portfolio including the Foolish 4 and the Vanguard Bond Funds. Should she sell some of the Home Depot for balance or just leave it. I am also recommending opening a Discount Brokerage account to invest the $100,000.

I realize that this is pretty long...but any suggestions would be greatly appreciated.

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You didn't tell us if the Jones investments are performing. If they are doing better than the S&P Index funds, why not keep them?

I would not recommend even Vanguard Bond Funds while interest rates are rising. It would be better to put that portion of the investment in corporate bonds--laddered maturities are best--or in CDs.

Given the recent volatility of the market, it can be risky investing large sums in stocks at the moment. However, for the long term investor, stocks are still the best investment.

Personally, I would keep the Home Depot as long as it is less than 20% of the portfolio and continues to be an industry leader.
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Long term treasuries is best answer.
Laddered maturities are not the best and corporates are a nono.
The paradym has changed the 30 year treasure yield is going down. The government is taking lots of them out of circulation.
1. HD. Watch out for capital gains. Might only want to sell when you need cash.
2, High yield tax free Bonds are good. You can get them with yield as good as Money market rates.
3. You need be looking at Balanced funds. You need to protect the assets.
I would go with Treasuries before I'd buy CDs. Thats all they are anyway.
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