New guy here- almost 50 trying to help 70year old

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LL22
Posts: 12
Joined: Thu Oct 26, 2017 2:07 am

New guy here- almost 50 trying to help 70year old

Post by LL22 » Thu Oct 26, 2017 9:32 pm

Hello everyone, I’m a new user here with my first post. I found this website after making a plan to assist an elderly family member organize her financial life after loss of spouse. This site came up during my research on Vanguard, the place she is comfortable consolidating her IRAs.
I have spent just over a week reading posts here to be better informed before writing my first post. My wife and I are 48 and actively talk about our retirement planning so coming to the assistance of our 72 year old relative should be a very good learning experience. She was not in charge of their investments which are exclusively in CDs but has the assistance of her Savings Bank.

I will start with our portfolio so you will know where I am coming from and the idea of taking over investments in CDs is not for me. I am a big fan of Jack Bogle and all he has done for the individual investor but my own portfolio does not mirror a typical boglehead. Feel free to give me any advice you like… I love learning from those smarter than me.

Two 48 year olds
Emergency funds: 100K providing 9-12 months of expenses.
Debt: 240K remain on 3.5% 15year mortgage (11 years remain); 5 credit cards autopaid
Tax Filing Status: Married Filing Jointly
Tax Rate: 39.6% Federal, 0% State
State of Residence: Florida
Age: 48
Desired Asset allocation: 95% stocks / 5% bonds
Desired International allocation: 5% of stocks

Total portfolio: 2,200,000
5% Emergency Fund (Brokerage CMA): 100K
20% cash
20% PowerShares National AMT-Free Munipal Bond (PZA)(er .28%)
20% Vanguard Long-Term Government Bond Index fund (VGLT) (er .07%)
20% Vanguard Tax-Exempt Bond Index Fund ETF (VTEB)(er .07%)
20% VanEck Vectors CEF Municipal Income ETF (XMPT)(er .40%)

26% Taxable (Marginable CMA): 575K (contribute 10K per month- this account generally holds dividend stocks in addition to selling of puts and calls on same stocks)
20% cash (for investing and put selling)
80% currently in 18 stocks: AAPL, ALDW, BAC, CVS, DIS, GILD, FAF, KR, LOW, MMM, MSFT, NKE, SJM, SYF, TJX, UTX, VFC, V

2% His IRA at Brokerage: 50K (no contributions - this account generally holds dividend stocks in addition to selling of puts and calls on same stocks)
20% cash (for investing and put selling)
80% currently in 3 stocks: PIR, MCD, WFC

16% Her IRA at Brokerage: 350K (no contributions - this account generally holds dividend stocks in addition to selling of puts and calls on same stocks) 20% cash (for investing and put selling)
20% cash (for investing and put selling)
80% currently in 10 stocks: DUK, JNJ, JPM, INTC, KSS, MRK, O, VLO, WBA, WSM, INTC

33% His 401k: 700K (contribute 18K per year with 12% match)
This account holds 19 stocks/etfs: AEO, BDCL, CLDT, CMI, CSCO, DAL, ED, EMR, F, FAF, HCI, M, MPC, OHI, PFE, SO, T, WMT, XLE

18% Her 401k: 400K (contribute 18K per year with 6% match)
Blackrock ishares S&P500 Index K fund (WFSPX) (er .04%)
Principal S&P SmallCap 600 Index Acct Z (---) (er .05%)
American Funds EuroPacific Growth R6 Fund (RERGX) (er .50%)
Principal LifeTime Hybrid 2030 CIT Z (---) (er .32%)

Retirment Income expectations: 85K year
His Social Security 30K
Her Social Security 30K
His Pension 25K starting at age 60 with spousal benefit

My Relatives Portfolio:
Emergency funds: 200K cash in savings account
Debt: none, no credit cards
Tax Filing Status: Single (employed but will retire within 1 year)
Tax Rate: 25% Federal, 6.65% State
State of Residence: New York
Age: 72
Current Asset allocation: 0% stocks / 100% CDs
Current International allocation: 0% of stocks

Current total Assets: 1,200,000 (not including home which is paid off)
Checking Account: 25K cash
Savings Account: 420K cash
Savings and Loan IRA1: 20K in CDs
Savings and Loan IRA2: 35K in CDs (inherited from spouse)
Savings and Loan IRA3: 115K in CDs
Savings and Loan IRA4: 25K in CDs
Savings and Loan IRA5: 30K in CDs (inherited from spouse)
Vanguard IRA: 30K in CDs (inherited from spouse)
Employer 401K: 500K (invested in an unknown target date fund)

I do not have the time or desire to take over the CD investments. The local bank suggested turning over the investments to their financial planner at a cost of approximately 1.5% which I feel is steep. They also suggested annuities but they did not seem like that good of a deal and if she went that route I would prefer to get help finding the best annuity available.

I originally suggested moving her accounts to bank/brokerages that I use to make it easier for me to help her manage but that is not what she wants. It is her money and ultimately her decisions but as time passes she will need more and more of my help. I have proposed she keep the Checking and Savings accounts that she has had for over 50 years and consolidate all her IRAs into one Vanguard IRA.

Proposal 1:
Checking Acct: Contributions from Social Security, Pension1, Pension2
Savings Acct: Contributions made with excess cash from checking & RMDs. Keep 6 months expenses in cash & remaining funds kept in CD ladders.
Credit card: currently everything is paid via check or cash. I would like to help set up autopays via checking and/or credit card. She is open to this but not complete yet.
Vanguard IRA: Consolidate nest egg by depositing funds as CDs mature where eventually the IRA would hold a fund allocation like this:
25% VWINX Vanguard Wellesley Income Fund (er .23%)
25% VASIX Vanguard Lifestrategy Income Fund (er .14%)
15% VSCGX Vanguard Lifestrategy Conservative Growth Fund (er .15%)
15% VYM Vanguard High Dividend Yield ETF (er .08%)
10% VPU Vanguard Utilities ETF (er .10%)
10% VFIIX Vanguard GNMA Fund (er .21%)

Proposal 2:
Same proposal for the local Checking and Savings plan but turn over Vanguard IRA to a Vanguard Personal Advisor (.3% management fee) that I would monitor.


Questions:

1. Does anyone have any experience with Vanguard’s Personal Advisor? I would like to know what people think of this service.

2. My relatives credit card was only in her spouse’s name so it was closed. She is open to getting a new one and I feel it is smart because it is necessary for everyday purchasing. Are there any retires out there that get along without a credit card? If so, I’d love to hear suggestions.

3. I feel the portfolio proposed would be too conservative for me but I think it is in line with her risk tolerance. Do you think it has too much equity exposure for someone in their 70s 80s??

4. I know our personal portfolio needs to transition over time. Did any retirees here keep a portfolio like this past 50, 60, beyond?

Thank you for your time!

User avatar
Sandtrap
Posts: 2338
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii😀 Northern AZ.😳

Re: New guy here- almost 50 trying to help 70year old

Post by Sandtrap » Thu Oct 26, 2017 10:03 pm

Some random thoughts:

Relatives portfolio: annual expenses? Income streams: ie: SS, etc?
IRA proposal: fund overlap? Also simplify?
Vanguard VPAS is a viable option. Especially considering the 1.5% AUM fee.
Your funds: simplify?
Question 4: please clarify?
Have you constructed an IPS statement for yourself and 72 year old relative as a starting point?. (Boglehead wiki link below)


Some helpful links:
Bogle Philosophy
/wiki/Bogleh ... hilosophy
Here are links to the wiki's "Getting Started" and "Investing Startup Kit" pages:
/wiki/Getting_started
/wiki/Bogleh ... rt-up_kit
Define General Investment Goals and Objectives
/wiki/Invest ... statement
Outline of Investing
/wiki/Outline_of_investing
Suggested Reading List
/RecommendedReading.php
What the experts say about investing
/wiki/What_ ... investing
Asking Portfolio Questions
/forum/viewt ... =1&t=6212
Last edited by Sandtrap on Thu Oct 26, 2017 11:56 pm, edited 3 times in total.

User avatar
BL
Posts: 7326
Joined: Sun Mar 01, 2009 2:28 pm

Re: New guy here- almost 50 trying to help 70year old

Post by BL » Thu Oct 26, 2017 11:21 pm

I suggest:
Proposal 2:
Same proposal for the local Checking and Savings plan but turn over Vanguard IRA to a Vanguard Personal Advisor (.3% management fee) that I would monitor.

Helping her set up a credit card may be a good idea.

Auto-bill pay also sounds good.

JBTX
Posts: 1520
Joined: Wed Jul 26, 2017 12:46 pm

Re: New guy here- almost 50 trying to help 70year old

Post by JBTX » Thu Oct 26, 2017 11:38 pm

LL22 wrote:
Thu Oct 26, 2017 9:32 pm
Hello everyone, I’m a new user here with my first post. I found this website after making a plan to assist an elderly family member organize her financial life after loss of spouse. This site came up during my research on Vanguard, the place she is comfortable consolidating her IRAs.
I have spent just over a week reading posts here to be better informed before writing my first post. My wife and I are 48 and actively talk about our retirement planning so coming to the assistance of our 72 year old relative should be a very good learning experience. She was not in charge of their investments which are exclusively in CDs but has the assistance of her Savings Bank.

I will start with our portfolio so you will know where I am coming from and the idea of taking over investments in CDs is not for me. I am a big fan of Jack Bogle and all he has done for the individual investor but my own portfolio does not mirror a typical boglehead. Feel free to give me any advice you like… I love learning from those smarter than me.

Two 48 year olds
Emergency funds: 100K providing 9-12 months of expenses.
Debt: 240K remain on 3.5% 15year mortgage (11 years remain); 5 credit cards autopaid
Tax Filing Status: Married Filing Jointly
Tax Rate: 39.6% Federal, 0% State
State of Residence: Florida
Age: 48
Desired Asset allocation: 95% stocks / 5% bonds
Desired International allocation: 5% of stocks
So at nearly 50 you want to have 90% of your investments in the US stock market? That seems neither well diversified, nor particularly age appropriate
Total portfolio: 2,200,000
5% Emergency Fund (Brokerage CMA): 100K
20% cash
20% PowerShares National AMT-Free Munipal Bond (PZA)(er .28%)
20% Vanguard Long-Term Government Bond Index fund (VGLT) (er .07%)
20% Vanguard Tax-Exempt Bond Index Fund ETF (VTEB)(er .07%)
20% VanEck Vectors CEF Municipal Income ETF (XMPT)(er .40%)

26% Taxable (Marginable CMA): 575K (contribute 10K per month- this account generally holds dividend stocks in addition to selling of puts and calls on same stocks)
20% cash (for investing and put selling)
80% currently in 18 stocks: AAPL, ALDW, BAC, CVS, DIS, GILD, FAF, KR, LOW, MMM, MSFT, NKE, SJM, SYF, TJX, UTX, VFC, V

2% His IRA at Brokerage: 50K (no contributions - this account generally holds dividend stocks in addition to selling of puts and calls on same stocks)
20% cash (for investing and put selling)
80% currently in 3 stocks: PIR, MCD, WFC

16% Her IRA at Brokerage: 350K (no contributions - this account generally holds dividend stocks in addition to selling of puts and calls on same stocks) 20% cash (for investing and put selling)
20% cash (for investing and put selling)
80% currently in 10 stocks: DUK, JNJ, JPM, INTC, KSS, MRK, O, VLO, WBA, WSM, INTC

33% His 401k: 700K (contribute 18K per year with 12% match)
This account holds 19 stocks/etfs: AEO, BDCL, CLDT, CMI, CSCO, DAL, ED, EMR, F, FAF, HCI, M, MPC, OHI, PFE, SO, T, WMT, XLE

18% Her 401k: 400K (contribute 18K per year with 6% match)
Blackrock ishares S&P500 Index K fund (WFSPX) (er .04%)
Principal S&P SmallCap 600 Index Acct Z (---) (er .05%)
American Funds EuroPacific Growth R6 Fund (RERGX) (er .50%)
Principal LifeTime Hybrid 2030 CIT Z (---) (er .32%)
That's a pretty complicated portfolio. I suspect it isn't going to perform any better than a mix of a few index funds tailored to your desired asset allocation.
Retirment Income expectations: 85K year
His Social Security 30K
Her Social Security 30K
His Pension 25K starting at age 60 with spousal benefit

My Relatives Portfolio:
Emergency funds: 200K cash in savings account
Debt: none, no credit cards
Tax Filing Status: Single (employed but will retire within 1 year)
Tax Rate: 25% Federal, 6.65% State
State of Residence: New York
Age: 72
Current Asset allocation: 0% stocks / 100% CDs
Current International allocation: 0% of stocks

Current total Assets: 1,200,000 (not including home which is paid off)
Checking Account: 25K cash
Savings Account: 420K cash
Savings and Loan IRA1: 20K in CDs
Savings and Loan IRA2: 35K in CDs (inherited from spouse)
Savings and Loan IRA3: 115K in CDs
Savings and Loan IRA4: 25K in CDs
Savings and Loan IRA5: 30K in CDs (inherited from spouse)
Vanguard IRA: 30K in CDs (inherited from spouse)
Employer 401K: 500K (invested in an unknown target date fund)

I do not have the time or desire to take over the CD investments. The local bank suggested turning over the investments to their financial planner at a cost of approximately 1.5% which I feel is steep. They also suggested annuities but they did not seem like that good of a deal and if she went that route I would prefer to get help finding the best annuity available.

I originally suggested moving her accounts to bank/brokerages that I use to make it easier for me to help her manage but that is not what she wants. It is her money and ultimately her decisions but as time passes she will need more and more of my help. I have proposed she keep the Checking and Savings accounts that she has had for over 50 years and consolidate all her IRAs into one Vanguard IRA.

Proposal 1:
Checking Acct: Contributions from Social Security, Pension1, Pension2
Savings Acct: Contributions made with excess cash from checking & RMDs. Keep 6 months expenses in cash & remaining funds kept in CD ladders.
Credit card: currently everything is paid via check or cash. I would like to help set up autopays via checking and/or credit card. She is open to this but not complete yet.
Vanguard IRA: Consolidate nest egg by depositing funds as CDs mature where eventually the IRA would hold a fund allocation like this:
25% VWINX Vanguard Wellesley Income Fund (er .23%)
25% VASIX Vanguard Lifestrategy Income Fund (er .14%)
15% VSCGX Vanguard Lifestrategy Conservative Growth Fund (er .15%)
15% VYM Vanguard High Dividend Yield ETF (er .08%)
10% VPU Vanguard Utilities ETF (er .10%)
10% VFIIX Vanguard GNMA Fund (er .21%)

Proposal 2:
Same proposal for the local Checking and Savings plan but turn over Vanguard IRA to a Vanguard Personal Advisor (.3% management fee) that I would monitor.


Questions:

1. Does anyone have any experience with Vanguard’s Personal Advisor? I would like to know what people think of this service.

2. My relatives credit card was only in her spouse’s name so it was closed. She is open to getting a new one and I feel it is smart because it is necessary for everyday purchasing. Are there any retires out there that get along without a credit card? If so, I’d love to hear suggestions.

3. I feel the portfolio proposed would be too conservative for me but I think it is in line with her risk tolerance. Do you think it has too much equity exposure for someone in their 70s 80s??

4. I know our personal portfolio needs to transition over time. Did any retirees here keep a portfolio like this past 50, 60, beyond?

Thank you for your time!

For a person that is mostly not in stock funds, putting a 70 year old into 60ish% of stocks seems like a huge leap. Also, you have some good funds in there, but I'm not sure I get the rhyme or reason for having them - especially a utilities ETF?

mouses
Posts: 2300
Joined: Sat Oct 24, 2015 12:24 am

Re: New guy here- almost 50 trying to help 70year old

Post by mouses » Fri Oct 27, 2017 1:35 am

I'm your relative's age and have about her savings.

I really see no need for her to gamble on the stock market. Unless she is spending an unusual amount, she should be able to live on what she has. If I were her and saw your complicated risky suggested plan, I would say thank you very much, no thanks. And my hair would stand on end.

Do not go near a financial planner, do not trust advice from a bank. A large bank where I live was bilking seniors and was finally clobbered by the state.

You didn't mention if she has Social Security coming in?

A 70 year old may well be able to manage savings that are largely in CDs with some initial help as she learns, unless she really feels she can't do this. Perhaps she needs to wait a bit to recover from her spouse's passing.

I would leave the money in CDs in CDs. I would take a look at the rates to see if she is getting at least 2%. If some of the interest is more abysmal, consider whether it is reasonable to take an early withdrawal hit to move to better CDs. As they mature, she may want to transfer the money to a smaller number of institutions keeping in mind the $250000 insurance limit.

Find out what is going on with the 401K. She can probably roll that out into an IRA so she has control over it.

$200K seems like a lot to have in an emergency fund unless she is spending at a high rate. I would look at her spending. Remember that in case of need, she can almost always take early withdrawal money from a CD, and in my area older people can withdraw from traditional IRA CDs with no early withdrawal penalty, at least from credit unions. Maybe banks are different.
Last edited by mouses on Fri Oct 27, 2017 9:23 am, edited 1 time in total.

Spirit Rider
Posts: 6483
Joined: Fri Mar 02, 2007 2:39 pm

Re: New guy here- almost 50 trying to help 70year old

Post by Spirit Rider » Fri Oct 27, 2017 1:52 am

You have someone who has been in primarily in cash, CDs and $500K in a target date fund. This is probably an overall asset allocation of 20:80. Personally, I wouldn't raise the equity portion for this person beyond 30:70. You still need to think of capital preservation as strong component of their portfolio. I suggestion one of the following simple portfolios:
  • Portfolio 1: 30:70
    • 100% Vanguard Target Retirement Income Fund
  • Portfolio 2: 30:70
    • 50% LifeStrategy Income Fund
    • 50% LifeStrategy Conservative Growth Fund

Olemiss540
Posts: 186
Joined: Fri Aug 18, 2017 8:46 pm

Re: New guy here- almost 50 trying to help 70year old

Post by Olemiss540 » Fri Oct 27, 2017 7:29 am

Spirit Rider wrote:
Fri Oct 27, 2017 1:52 am
You have someone who has been in primarily in cash, CDs and $500K in a target date fund. This is probably an overall asset allocation of 20:80. Personally, I wouldn't raise the equity portion for this person beyond 30:70. You still need to think of capital preservation as strong component of their portfolio. I suggestion one of the following simple portfolios:
  • Portfolio 1: 30:70
    • 100% Vanguard Target Retirement Income Fund
  • Portfolio 2: 30:70
    • 50% LifeStrategy Income Fund
    • 50% LifeStrategy Conservative Growth Fund
But is that too boring?

Just kidding. This +1! Simple, diverse, low cost.

User avatar
Watty
Posts: 11542
Joined: Wed Oct 10, 2007 3:55 pm

Re: New guy here- almost 50 trying to help 70year old

Post by Watty » Fri Oct 27, 2017 8:17 am

You post is very difficult to follow. You may get better comments if you edit it to take out your financial information. You can make a separate post about your finances.

I might have missed it but what are her income needs from the portfolio after Social Security?

With as many retirement accounts as she has she needs to make sure that she keeps all the beneficiaries up to date and takes the RMD's on time. If she has grandkids as beneficiaries then as more are born she should be sure to add them, there may be some way to say "all my living grandkids" but you would need to check on how to do that.

The financial firm can set the RMDs up to be done automatically each year but you still need to check to make sure that they happened. Her late husband may have been required to take RMD's in the year he died so be sure to check to see if that is done.

There are various thoughts about when in the year to do the RMD but doing them in January would get them done before she does her taxes so if there is a problem it would likely be caught when last years taxes are done. I don't like the idea of doing them in December because there is little time to fix any problems. It will hopefully be years from now but the RMD's will also need to be done in the year she dies and having them done before she dies that will make settling her estate a lot easier.
Spirit Rider wrote:
Fri Oct 27, 2017 1:52 am
You have someone who has been in primarily in cash, CDs and $500K in a target date fund. This is probably an overall asset allocation of 20:80. Personally, I wouldn't raise the equity portion for this person beyond 30:70. You still need to think of capital preservation as strong component of their portfolio. I suggestion one of the following simple portfolios:
  • Portfolio 1: 30:70
    • 100% Vanguard Target Retirement Income Fund
  • Portfolio 2: 30:70
    • 50% LifeStrategy Income Fund
    • 50% LifeStrategy Conservative Growth Fund
+1

On Portfolio 1

In addition to all the other possible problems with a more complex portfolio there is a chance that you could be hit by the proverbial Mack truck she would then have problems with trying to manage a more complex portfolio. I have heard of situations where similar things have happened and there are lots of sleazy financial "advisors" who have no problem with fleecing an elderly widow.

The target date funds are a great choice in the right situation. The main reason to not use them are if you have a lot of money in a taxable account where taxes are an issue or if you have a 401k that does not have good low cost target date funds. When I retired a few years ago I moved most of my retirement money into a target date fund to make it easier to manage when I am older and may be less capable or if my wife who knows less about investing has to manage it some day.

Another factor is that when people get older some will have more difficulty in following what you are doing with their investment accounts and there may be misunderstandings when you do something like a routine rebalancing. This is not really paranoia since lots of people do have family members take advantage of them. If she gets agitated about when you do something with her finances and tells someone like a nursing home worker that you are cheating her then you may very well find yourself being investigated. In some situation the state workers will turn managing her finances over to a very expensive financial manager.

User avatar
Watty
Posts: 11542
Joined: Wed Oct 10, 2007 3:55 pm

Re: New guy here- almost 50 trying to help 70year old

Post by Watty » Fri Oct 27, 2017 8:28 am

LL22 wrote:
Thu Oct 26, 2017 9:32 pm
2. My relatives credit card was only in her spouse’s name so it was closed. She is open to getting a new one and I feel it is smart because it is necessary for everyday purchasing. Are there any retires out there that get along without a credit card? If so, I’d love to hear suggestions.
It would be good to have her get one now. If she does not get one and decides that she needs one in five or ten years she may not have an adequate credit score to easily get one.

Some things like travel are very difficult to do without a credit card. Credit cards also give you a lot of protections for things like car repairs or bad services that can be disputed with a credit card.

There have lots of threads about the risks of using debit cards so it would be good to have her avoid those.

mouses
Posts: 2300
Joined: Sat Oct 24, 2015 12:24 am

Re: New guy here- almost 50 trying to help 70year old

Post by mouses » Fri Oct 27, 2017 9:21 am

I would have her get two credit cards. A spare is needed in case the fraud department of one is over zealous and shuts down a card when she needs to use one. Also I sometimes find that gas pumps reject one of my chip cards but not the other.

JW-Retired
Posts: 6460
Joined: Sun Dec 16, 2007 12:25 pm

Re: New guy here- almost 50 trying to help 70year old

Post by JW-Retired » Fri Oct 27, 2017 9:26 am

LL22,
I've nothing much to say about your relative except the simpler the better, and agree with Spirit Rider no more than 30% equities. His portfolio 1 would be fine with me.

I do have a couple of questions about your 50 individual stocks portfolio.:shock: (1) How do you find the time to manage it? (2) Have you made any comparisons of your performance with a simple do-nothing target retirement fund like VTIVX, for example? Or, if they are all US stocks, then with Vanguard's total US stock mkt (VTSAX).

Comparing your 401k performance with your wife's might also be informative.

Welcome to the Forum!
JW
Retired at Last

LL22
Posts: 12
Joined: Thu Oct 26, 2017 2:07 am

Re: New guy here- almost 50 trying to help 70year old

Post by LL22 » Mon Oct 30, 2017 10:29 pm

Sandtrap,

Thank you. I will take the time to read through the links you provided.

Relatives Income at retirment: $4800 per month (SS + pensions)
Relatives fixed expenses at retirment: $3300 (includes property taxes & descritionary)

Ok, I do see the fund overlap. I was hoping to get some feedback on that. I will look to better that but with other feedback I am leaning towards having the Vanguard managed.

My funds... one day I will simplify!

Question 4... I know I am on a Boglehead website but I was curious if anyone here started as a Dividend Growth Investor, Agressive equity trader, Option trader, etc... Basically I am curious if active investors transitioned to pure Jack Bogle way or have always invested this way.

Thank you!
Sandtrap wrote:
Thu Oct 26, 2017 10:03 pm
Some random thoughts:

Relatives portfolio: annual expenses? Income streams: ie: SS, etc?
IRA proposal: fund overlap? Also simplify?
Vanguard VPAS is a viable option. Especially considering the 1.5% AUM fee.
Your funds: simplify?
Question 4: please clarify?
Have you constructed an IPS statement for yourself and 72 year old relative as a starting point?. (Boglehead wiki link below)


Some helpful links:
Bogle Philosophy
/wiki/Bogleh ... hilosophy
Here are links to the wiki's "Getting Started" and "Investing Startup Kit" pages:
/wiki/Getting_started
/wiki/Bogleh ... rt-up_kit
Define General Investment Goals and Objectives
/wiki/Invest ... statement
Outline of Investing
/wiki/Outline_of_investing
Suggested Reading List
/RecommendedReading.php
What the experts say about investing
/wiki/What_ ... investing
Asking Portfolio Questions
/forum/viewt ... =1&t=6212

LL22
Posts: 12
Joined: Thu Oct 26, 2017 2:07 am

Re: New guy here- almost 50 trying to help 70year old

Post by LL22 » Mon Oct 30, 2017 10:32 pm

Thank you for the feedback!
BL wrote:
Thu Oct 26, 2017 11:21 pm
I suggest:
Proposal 2:
Same proposal for the local Checking and Savings plan but turn over Vanguard IRA to a Vanguard Personal Advisor (.3% management fee) that I would monitor.

Helping her set up a credit card may be a good idea.

Auto-bill pay also sounds good.

User avatar
sergeant
Posts: 599
Joined: Tue Dec 04, 2007 11:13 pm

Re: New guy here- almost 50 trying to help 70year old

Post by sergeant » Mon Oct 30, 2017 10:40 pm

Most every person her started as an active investor before finding the true path. Stick around awhile and you will join us.
Lincoln 3 EOW!

LL22
Posts: 12
Joined: Thu Oct 26, 2017 2:07 am

Re: New guy here- almost 50 trying to help 70year old

Post by LL22 » Mon Oct 30, 2017 11:02 pm

mouses,

Thank you very much for responding. I have read a lot of good comments to help me but I especially appreciate someone commenting about the age appropriateness of what I have proposed. I especially appreciate your reaction to what you consider a complicated risky plan as it seems like such a conservative plan which makes me realize her interests will likely be best served with a Vanguard adviser that can transfer her municipal bonds and suggest a more conservative portfolio that I can monitor.

Yes, she has social security and pensions that cover her planned expenses so that is very helpful. My suggestion has always been to move the 401k into Vanguard IRA and will continue with that plan. My intentions are to avoid bank planners that try to overcharge for services and sell bloated annuities.

I agree about the large emergency fund. It was all a result of very frugal living and conservative investing. Never one equity so I'm like the exact opposite but at 70 you are correct... not the time to invest in equities.

Thank you again,
LL
mouses wrote:
Fri Oct 27, 2017 1:35 am
I'm your relative's age and have about her savings.

I really see no need for her to gamble on the stock market. Unless she is spending an unusual amount, she should be able to live on what she has. If I were her and saw your complicated risky suggested plan, I would say thank you very much, no thanks. And my hair would stand on end.

Do not go near a financial planner, do not trust advice from a bank. A large bank where I live was bilking seniors and was finally clobbered by the state.

You didn't mention if she has Social Security coming in?

A 70 year old may well be able to manage savings that are largely in CDs with some initial help as she learns, unless she really feels she can't do this. Perhaps she needs to wait a bit to recover from her spouse's passing.

I would leave the money in CDs in CDs. I would take a look at the rates to see if she is getting at least 2%. If some of the interest is more abysmal, consider whether it is reasonable to take an early withdrawal hit to move to better CDs. As they mature, she may want to transfer the money to a smaller number of institutions keeping in mind the $250000 insurance limit.

Find out what is going on with the 401K. She can probably roll that out into an IRA so she has control over it.

$200K seems like a lot to have in an emergency fund unless she is spending at a high rate. I would look at her spending. Remember that in case of need, she can almost always take early withdrawal money from a CD, and in my area older people can withdraw from traditional IRA CDs with no early withdrawal penalty, at least from credit unions. Maybe banks are different.

LL22
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Re: New guy here- almost 50 trying to help 70year old

Post by LL22 » Mon Oct 30, 2017 11:03 pm

mouses wrote:
Fri Oct 27, 2017 9:21 am
I would have her get two credit cards. A spare is needed in case the fraud department of one is over zealous and shuts down a card when she needs to use one. Also I sometimes find that gas pumps reject one of my chip cards but not the other.
I appreciate this. I agree but it may be hard to convince her but I see the reasoning. I will look into seeing if her bank has two offerings as that would make it easier.

Thanks,
LL

LL22
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Re: New guy here- almost 50 trying to help 70year old

Post by LL22 » Mon Oct 30, 2017 11:11 pm

Spirit Rider,

I really like this simple portfolio idea and having a 30:70 equity exposure for capital appreciation but struggle with suggesting someone with zero equity exposure ever to take it on now (as others have commented). I myself like these portfolios so I will suggest these as options in addition to looking at taking on a Vanguard adviser. I really appreciate you suggesting the two Portfolio models.

Thanks,
LL
Spirit Rider wrote:
Fri Oct 27, 2017 1:52 am
You have someone who has been in primarily in cash, CDs and $500K in a target date fund. This is probably an overall asset allocation of 20:80. Personally, I wouldn't raise the equity portion for this person beyond 30:70. You still need to think of capital preservation as strong component of their portfolio. I suggestion one of the following simple portfolios:
  • Portfolio 1: 30:70
    • 100% Vanguard Target Retirement Income Fund
  • Portfolio 2: 30:70
    • 50% LifeStrategy Income Fund
    • 50% LifeStrategy Conservative Growth Fund

LL22
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Re: New guy here- almost 50 trying to help 70year old

Post by LL22 » Mon Oct 30, 2017 11:31 pm

JW,

Thanks, I think Spirit RIder's suggestions are great and I will bring them both up in addition to the idea of having a Vanguard advisor (much less costly than her bank 1.5%).

Active trading is not the Bogle way and I completely understand that which is why I wanted to get some feedback on helping a relative. I don't want to invest other peoples funds the way I do which is why I wanted some perspective. With that said I have been doing it for a while and have been successful with my benchmark being the S&P500. The brokerage accounts that I trade and sell options have generally outperformed the benchmark and other accounts. Unfortunately the accounts with limited investment choices, like my wife's 401K, lag the market due to funds costs but generally come close.

I am considering putting a portion of each account into a more conservative base as the portfolio grows and will look at increasing it as we get closer to retirement. Perhaps I need to look more at VDIGX dividend growth or other similar funds. It'll take a while to get me to change my investing but I am always open to new ideas. We are not financially independent yet so I push myself hard with investing but I also enjoy it.

Thank you for your feedback!
LL

JW-Retired wrote:
Fri Oct 27, 2017 9:26 am
LL22,
I've nothing much to say about your relative except the simpler the better, and agree with Spirit Rider no more than 30% equities. His portfolio 1 would be fine with me.

I do have a couple of questions about your 50 individual stocks portfolio.:shock: (1) How do you find the time to manage it? (2) Have you made any comparisons of your performance with a simple do-nothing target retirement fund like VTIVX, for example? Or, if they are all US stocks, then with Vanguard's total US stock mkt (VTSAX).

Comparing your 401k performance with your wife's might also be informative.

Welcome to the Forum!
JW

LL22
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Re: New guy here- almost 50 trying to help 70year old

Post by LL22 » Mon Oct 30, 2017 11:32 pm

sergeant wrote:
Mon Oct 30, 2017 10:40 pm
Most every person her started as an active investor before finding the true path. Stick around awhile and you will join us.

:) thank you!

Spirit Rider
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Re: New guy here- almost 50 trying to help 70year old

Post by Spirit Rider » Mon Oct 30, 2017 11:47 pm

LL22 wrote:
Mon Oct 30, 2017 11:11 pm
I really like this simple portfolio idea and having a 30:70 equity exposure for capital appreciation but struggle with suggesting someone with zero equity exposure ever to take it on now
In your OP, you listed her with $500K in a 401k with a target date fund. After her age, that is likely a 30:70 equity exposure. So she already has some equity exposure.

LL22
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Re: New guy here- almost 50 trying to help 70year old

Post by LL22 » Tue Oct 31, 2017 8:18 am

very good point. I like your suggestions and will bring up the two Portfolio suggestions in addition to having a dedicated adviser.

mxs
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Re: New guy here- almost 50 trying to help 70year old

Post by mxs » Tue Oct 31, 2017 10:11 am

If you go with either of Spirit Rider's portfolio suggestions (or something very similar) there is almost no reason to have a paid for advisor. Vanguard IRA with one or two funds + local bank savings/checking account + credit card or two is all they need. Simple and easy.

LL22
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Re: New guy here- almost 50 trying to help 70year old

Post by LL22 » Tue Oct 31, 2017 3:39 pm

mxs,

Thanks and agreed. I plan to present both of spirit's plans... I prefer the two funds which is still much more simple and easy than my first ideas. I appreciate your time.

Take care,
LL

Lynette
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Re: New guy here- almost 50 trying to help 70year old

Post by Lynette » Tue Oct 31, 2017 4:00 pm

I haven't read the whole thread in detail but I do not think that there is much discussion of taxation. This is the major issue to consider as far as I am concerned. If she is still working I assume she is getting health care from her employer and not taking RMDs if her 401K is with her employer. When she retires, she will likely go onto Medicare unless she works for the Federal government or some other entity that provides healthcare. Her MAGI will include RMDs and as she has pensions, this will likely mean that she falls into the income bracket where she has to pay additional Medicare B and D premiums.

LL22
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Re: New guy here- almost 50 trying to help 70year old

Post by LL22 » Wed Nov 01, 2017 10:33 am

Lynette,

Thank you. I left these out as I didn't think it was directly related to the investing objectives but you are correct that it is part of the total picture. She is enrolled in Medicare with retirement health plan as secondary. She will remain in the low bracket until her 401k moves to her IRA after retirement and will likely move into the second bracket in 2-4 years.

PatrickA5
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Re: New guy here- almost 50 trying to help 70year old

Post by PatrickA5 » Wed Nov 01, 2017 5:47 pm

mxs wrote:
Tue Oct 31, 2017 10:11 am
If you go with either of Spirit Rider's portfolio suggestions (or something very similar) there is almost no reason to have a paid for advisor. Vanguard IRA with one or two funds + local bank savings/checking account + credit card or two is all they need. Simple and easy.
+1

Exactly what we have. All retirement accounts in 2 Vanguard Life Strategy funds in order to hit our 50/50 allocation. We also have a local bank free checking account and a few credit cards. That's all. About as easy (and cheap) as you can get.

LL22
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Re: New guy here- almost 50 trying to help 70year old

Post by LL22 » Thu Nov 02, 2017 12:24 pm

Patrick,

Thank you. Further confirmation for me that this is the right way to go!

LL

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