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The husband of a long-time family friend died two years ago. He managed the family investments and had essentially all assets (about a million) in US gov't bonds. She is about 80 years old and in excellent health. She has a pension that covers her expenses and no debt. She turned to me for advice on protecting/investing her money.
Many of her bonds, which had been paying 4-5 percent interest, have now matured. With bond rates so low now I haven't advised reinvesting in US bonds. I have been suggesting that she park the money in the Vanguard Prime MM fund for now, which she has done.
So far, I think my advice has been responsible with regard to safety of the money, but not with regard to investing (ie growing the money). Given the pitiful rate of return on the Prime MM fund I am considering a suggestion that some or all of the money go into the Short-Term bond fund (VBISX) and/or GNMA fund (VFIIX).
I'm over 50 years old and have some knowledge/experience in investing. If it were my money I'd feel better about taking some risk. But I think it would upset and disappoint my friend to see "losses" of more than a couple of percent.
Are the funds I mentioned reasonable alternatives to the Prime MM fund? Or is there a better, but ultra-conservative, way to improve upon Prime MM returns?
Maybe the most responsible advice I could offer would be for her to hire a financial planner but I've never felt the need to do that myself so I haven't suggested that to her yet.
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