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Assets of 90 Year Old Relative; Your Opinion Please...
Old 01-16-2017, 03:33 PM   #1
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Assets of 90 Year Old Relative; Your Opinion Please...

Some of you may have read my earlier post about having some issues with my Dad and financial control. Well, the hard part (convincing him that I should help out more w/ his finances) is over and now it's time for the logistics. He is 100% in concurrence that I manage his portfolio and that indeed his management of said funds has been "slipping". So, here are the details: Total assets are in the lower 7-figures range. He lives independently in his paid for home and is in pretty good physical shape (and abilities) for his age. His day to day expenses are covered by SS and his yearly RMDs and he has yet to draw down any principal. When it comes time, he will move in with us and if need be, we will hire any help required to keep him in the home. Obviously, sometimes this doesn't work out for whatever reason, but those are the current assumptions. His assets are distributed as follows:

Home: 41% (assumption is we have a fire sale and sell at lowest price)
Cash: 26%
Equities: 33%

The biggest issue I have is the relatively large amount of cash holding. It's some physically held cash (safe deposit box) but mostly in two separate checking accounts drawing less than 1% a year. So, I am thinking of shifting about 1/2 of that to short term or intermediate bond funds, something similar to VFSTX (Vanguard Short-Term Investment-Grade Fund Investor Shares). So, what do the fine folks here think? What would you do in my (or my Dad's) position? Am I over thinking this and perhaps I should leave the cash as is? Percentage wise it doesn't seem too crazy for his age, but it's a large sum of money and technically it's losing money just sitting there.

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Old 01-16-2017, 03:40 PM   #2
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Move some of the cash to online bank accounts paying 1%. (up to 50K worth) for sudden big expenses.
Buy some equities with the rest of the cash in a regular brokerage account, like VTI as example.

Sell 2 or 3 years worth of RMDs in this IRA so it is cash as he will have to take that out, in the next 2 and 3 years

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Old 01-16-2017, 08:43 PM   #3
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I have a similar issue with my mom, who is younger, physically good health, Alzheimer's. Bills are paid by SS, land rent income, and awesome LTC benefits ($3000/mo, no time or monetary limit). She has quite a bit in cash. Her accountant thinks we should invest more aggressively with the notion that we are really managing an inheritance vs. a portfolio that she will likely ever need to withdraw from.

It's hard for me to treat this in any manner other than a portfolio of a nearly 80 year old woman...meaning taking little risk. I don't care to take inappropriate risk with her assets to create a bigger inheritance for us siblings.
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Old 01-16-2017, 08:48 PM   #4
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my dyslexia.... thought that said 'arrests'!
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Old 01-16-2017, 09:17 PM   #5
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I've done this for my Mom for about 10 years since Dad died... she has no interest in it and trusts my judgement.

Since between her SS and a commercial rental property she owns her income is more than enough to meet her expenses, I invest her portfolio essentially for me and my siblings and target a 60/40 AA. She has 5 tickers... Total Stock, Total International Stock, FTSE All-World ex-US, Total Bond and Prime Money Market... that's it.

Her ER is a whopping 0.08% and her 1, 3 and 5 year returns have been 6.1%, 4.6% and 8.6%, respectively.

In your case, I would keep it simple with some cash in an online savings account for liquidity and put the rest in Wellesley or Wellington or a handful of index funds.
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