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Parents Asking Me What to Do with Money
Old 02-24-2014, 02:26 PM   #1
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Parents Asking Me What to Do with Money

Parents, ages 79 and 73, inherited about $150,000 about 18 months ago. They asked my advice what to do with the money and I had them put it all into Wellesley.
They have pensions and social security to cover basic living expenses and will draw from the Wellesley account as needed for any travel, major purchases, or other wants.
Personally I have always been about 100% invested in stocks so not sure what was appropriate for their ages. They would probably have just put it all into CD’s if I deferred giving them my opinion.
Did I give them sound advice?
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Old 02-24-2014, 02:30 PM   #2
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Given their ages I'd pick something a bit (okay, a lot) more conservative with the stock holdings. But I'm more of an index guy.
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Old 02-24-2014, 02:30 PM   #3
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Parents, ages 79 and 73, inherited about $150,000 about 18 months ago. They asked my advice what to do with the money and I had them put it all into Wellington.
They have pensions and social security to cover basic living expenses and will draw from the Wellington account as needed for any travel, major purchases, or other wants.
Personally I have always been about 100% invested in stocks so not sure what was appropriate for their ages. They would probably have just put it all into CD’s if I deferred giving them my opinion.
Did I give them sound advice?
If they don't need the money for themselves that should work pretty well. If they start to depend on it a bit more, I might want separate bond and equity funds so they can avoid selling equities in a down market.

My mom is 85 and stays in 100% stocks, but she never draws from her portfolio.
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Old 02-24-2014, 02:34 PM   #4
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Sorry, I've edited the original post to say Wellesley instead if Wellington.
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Old 02-24-2014, 02:42 PM   #5
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Sorry, I've edited the original post to say Wellesley instead if Wellington.
Ah, that seems a better choice. They'll do the rebalancing as things change so your parents won't have to.
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Old 02-24-2014, 03:12 PM   #6
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Why not just add to their Wellesley holdings?
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Old 02-24-2014, 03:26 PM   #7
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This was their fist investment they have made in their lifetime (no previous holdings).
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Old 02-24-2014, 03:28 PM   #8
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Since they have a pension and SS that covers their basic living expenses, then Wellesly seems like a good idea to me. One caveat: If they are the type who will panic and sell low when the markets go down and Wellesly follows it part way down, then you might want to re-think this.
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Old 02-24-2014, 04:00 PM   #9
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Wellesley should kick off a little over 4K per year at current yield. If that's all they need they will never have to sell. In good years they can also take some capital gain.
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Old 02-24-2014, 04:33 PM   #10
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Love the Wellesley idea. Relatively low volatility during crazy markets, good income and excellent long-term returns.
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Old 02-24-2014, 07:55 PM   #11
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Great. Thanks for the feedback. One more item off my concern list.
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Old 02-24-2014, 08:28 PM   #12
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Wellesley is a good choice. I hope your parents are happy with this as time goes by and don't get concerned about short term fluctuations. This keeps it simple.
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Old 02-24-2014, 09:25 PM   #13
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Wellesley being about 2/3 bond and 1/3 stock makes it a good choice for their age and financial stuation. With that amount of deposit you also get the lower cost Admiral shares.
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Old 02-24-2014, 10:50 PM   #14
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OP, IMO you did good. I recommended Wellesley to a 90 yo friend of the family a while ago. She didn't "need" the money but the monthly withdrawal from Wellesley to her checking account will make things more comfortable for her and IF Wellesley continues its historical performance there will be some growth for her heirs. The alternative she was considering was SPIA with 10 years guaranteed the had a 10 year IRR of ~1.5% IIRC.

If she lives long and Wellesley falters then I'll look a bit foolish but I think the chance of both those happening is slim.
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