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Hello, Long story short about a year ago my grandmother asked me if I would take over responsibility for her finances. My mom and aunt have always been adversarial and she thought it would be best for me to look after her money and keep it from being fought over. So far so good- I got a PoA for her and there haven't been any real issues. Her health is in a slow decline and she will eventually need assisted living, though hopefully not for a couple more years (she has mild dementia but no signs of Alzheimer's yet). My grandfather set her up with two annuity accounts for her before he died, and they had about 55k in them combined. One of the things we all agreed on as a family was that I needed to take the money out of the annuities while my grandmother was still able to easily give consent for that and put the money in an account or another annuity that I control fully in her name. Getting the funds out of the annuities was a real pain in the rear end but now I have the 55k in a checking account at a local bank that only I can access. My question boils down to: since the funds aren't needed for her right now, would it be ok/advisable to put them in another annuity so they will at least draw some interest? I'd hate for her to miss out on earning something if she ends up not needing the money for another 5 years or so. She's doing fine on her fixed income and has very few expenses. I just don't want to waste an opportunity and feel like the money sitting in a checking account is wasteful somehow.
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Jan 7, 2016 00:11
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| # ? Apr 29, 2024 20:05 |
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Moving this to BFC, where people who care to think about business and finance are.
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Jan 7, 2016 08:28
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If I'm understanding you - she might need the money anywhere from 2 to 10 years from now, or so? Myself, I'd be pretty tempted to just leave it in a high (lol, "high") interest savings account and just not worry about it. You'd lose a little value to inflation but hopefully not much. On the other hand if there's a good chance she won't need it for 10-15 years or more I might look for something riskier, like Vanguard's life strategy 80/20 or 60/40 funds.
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Jan 7, 2016 16:21
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I googled for low risk vanguard, and found this article: http://investorplace.com/2015/03/3-best-vanguard-funds-conservative-retirees-vscgx-vwinx-vpgdx/view-all/#.VpEbB0orLDc
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Jan 9, 2016 15:37
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n8r posted:I googled for low risk vanguard, and found this article: I keep long-term savings in VWINX and it has been on the decline recently. If rates continue to rise and stocks continue to fall, then this trend will likely continue. It's not so much an issue for long-term, as the distributions are high enough to cover the losses over the year. But short-term could be a net loss. My advice is, for the time being: cash is king. Keep all of your assets in a high interest savings account and reevaluate the situation next year.
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Jan 18, 2016 16:35
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Thanks for the feedback guys. I think I will just keep the money in an easily accessible account for a few months and reconsider then.
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Jan 19, 2016 04:22
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You might consider a CD ladder at your bank. They're easy to set up. With that $55k you can set $15k aside for emergency (and to keep my example simpler) and buy 6-month, 1-year, 18-month and 2-year CDs at $10,000 each.. Every six months you'll be able to roll one into a 2 year CD which pays more interest. When (if) interest rates go back to normal it can provide a substantial return, even on a relatively small amount like $55k. The reason for the laddering is that you get higher rates for longer terms, but you get the opportunity to buy new longer-term CDs at more favorable rates every six months. They're FDIC insured so they're about as safe as cash. It won't grow quickly but it will grow steadily.
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Mar 1, 2016 06:32
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| # ? Apr 29, 2024 20:05 |
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A two year CD pays 1.51% right now. A one-year CD pays 1.35%. A high yield savings account pays 1.00%. I'm not sure the marginal gains of a CD ladder are really worth the effort and lack of flexibility.
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Mar 4, 2016 20:34
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