For the past couple years, I've been handling the savings account of my mother (now 76), since if she did it it would just sit in the bank. She doesn't have a lot left, under $50K, but owns her own home and has a good long-term care policy. My investment advisor has it doing pretty well, about 8% interest, but it's primarily in stock mutual funds, with a little in bonds and real estate funds with 5% in a money-market to draw upon. We need access to it intermittently to make repairs on her home or for any type of emergency, and as she ages we may need access for housekeeping or personal care help, but not for awhile yet, she's still in okay health. My question is: I'm nervous about keeping it in the stock market long-term and want to put it into something which is semi-liquid but still gets good interest, and is safer. Would iBonds be appropriate? They seem to make a good rate of return and the penalty for cashing them a little at a time doesn't seem too high. Does anyone have any other suggestions as to how I could tailor this investment to be safer yet still somewhat accessible and earning well? Thanks, The novice, JJSea P.S. Thanks for all the replies to my earlier post--you guys are great!
Frankly, I'm surprised that an investment "advisor" would have most of a senior's investments in the equity markets.
Dear JJSea This is a difficult question. But here are the performances of some non-interest bearing items: Central Fund of Canada (CEF-AMEX), an all gold and silver bullion stock, was $3.00 in 2001 and is above $7 today. This is not practical to your situation, but it does give you some idea of current real money performance over interest bearing fiat money which not only is drawn down on principle, but is taken to the cleaners in purchasing power by the working of inflation compounding (negative to purchasing power). American Century Global Gold (ACGGX) is up about 298% for the same period of 2001 to present. This is more practical. A split of $50,000 in half would have worked this way. $25,000 at 3.5% is around $875 per annum interest. The balance in ACGGX, $25,000 x 298% = $74,500 and a little more to live on. Enerplus Resources Fund (ERF), a Canadian oil and gas trust NYSE listed, at around $13/sh in 2001 would have come in at 3,700 ($48,100). At a distribution of $1.44/sh in 2001, the 3,700 shares would have paid out $5,328--considerably more than interest income in general. Today, with higher oil and gas prices the same number of shares at the current distribution of $4.33 today would pay out $16,021!! And the $48,100 initial cost of the shares today would be $192,400 at the current $52/sh. That would have been real cool!! I give you these examples as an indication of how thinking out of the box can work wonders. I did not buy ERF, though I wish I had been smart enough to put 1/3 of what I began with into this item. I did however, with precious metal investing, manage to increase my net worth 4x (including a fully paid for house) in about four year's time. So gold worked nearly as well a black gold. If we get a recession, then ERF and other Canadian oil and gas trust may be an option. If these items ever again appear in the bargain table, then I may pick up a slew. Right now, gold and silver seem to be correcting. You might be able to do something with this after the correction as far as gold and silver stocks go. As for holding general stock company issues, my own personal opinion is that you would have to be nearly certifiably insane to do so at the highest evaluations in the history. This is high risk for some one's mom or granny. This is not investment advice. It is merely the attempt to get you thinking in non-conventional terms or forms. My Mom died in 2000--and I have a soft spot in my heart for mom's. Dave Something like ERF
Dear JJSea This is a difficult question. But here are the performances of some non-interest bearing items: Central Fund of Canada (CEF-AMEX), an all gold and silver bullion stock, was $3.00 in 2001 and is above $7 today. This is not practical to your situation, but it does give you some idea of current real money performance over interest bearing fiat money which not only is drawn down on principle, but is taken to the cleaners in purchasing power by the working of inflation compounding (negative to purchasing power). American Century Global Gold (ACGGX) is up about 298% for the same period of 2001 to present. This is more practical. A split of $50,000 in half would have worked this way. $25,000 at 3.5% is around $875 per annum interest. The balance in ACGGX, $25,000 x 298% = $74,500 and a little more to live on. Enerplus Resources Fund (ERF), a Canadian oil and gas trust NYSE listed, at around $13/sh in 2001 would have come in at 3,700 ($48,100). At a distribution of $1.44/sh in 2001, the 3,700 shares would have paid out $5,328--considerably more than interest income in general. Today, with higher oil and gas prices the same number of shares at the current distribution of $4.33 today would pay out $16,021!! And the $48,100 initial cost of the shares today would be $192,400 at the current $52/sh. That would have been real cool!! I give you these examples as an indication of how thinking out of the box can work wonders. I did not buy ERF, though I wish I had been smart enough to put 1/3 of what I began with into this item. I did however, with precious metal investing, manage to increase my net worth 4x (including a fully paid for house) in about four year's time. So gold worked nearly as well a black gold. If we get a recession, then ERF and other Canadian oil and gas trust may be an option. If these items ever again appear in the bargain table, then I may pick up a slew. Right now, gold and silver seem to be correcting. You might be able to do something with this after the correction as far as gold and silver stocks go. As for holding general stock company issues, my own personal opinion is that you would have to be nearly certifiably insane to do so at the highest evaluations in the history. This is high risk for some one's mom or granny. This is not investment advice. It is merely the attempt to get you thinking in non-conventional terms or forms. My Mom died in 2000--and I have a soft spot in my heart for mom's. Dave Something like ERF