My mother recently received $15,000.00 and wants to put $10,000.00 in something that will benefit her fin?

Question

What is the best way for her to make the most money off of her money? My dad recently passed and he was a retired Bank President so she knows nothing about this kind of thing he was there to always tell her. Thank you in advance. :)

My mother is 77 years old on a fixed income. She does not have a morgage but she pays rent.

She doesn't work. She basically will now live on her Social Security.

Answer 1

Here is the biggest problem. You need at least 7% interest to break even on worth (because of inflation and taxes) on an investment and all the safe investments are under 7% with many under 5% and at her age stocks aren't the wisest thing (this includes mutual funds). Probably the best way to do it is buy I bonds. That way if there is inflation trouble, the rate will go up to match.

Answer 2

Hi, I'm a financial advisor and I work with Citigroup. Some of the answers given were correct while others were a little off. Savings accounts don't benefit anyone but the bank. If you invest it there [bank] you might get 1% on your money, while the bank makes 12% because they will invest it and keep the difference. If your mom puts the money in a RothIRA then she has full access to the money if she ever needs it. She can touch the $10,000 that she invests but can't touch whatever the money grows to. For example, she invests it and in 6 ears has $20,000, so she can take out the $10,000 she puts in but not the $10,000 she gained. If she is going to use the money in less than 5 years, then she needs to keep it pretty conservative, she can earn approximately 3-5%, so she doesn't lose what she put in. If she is going to use the money in 5 to 10 years then she can place it in something that is a little less conservative, where she can earn approximately 4-7%. If she doesn't need it for 10 years or more, she can earn up to 12% on her money, and double her money every 6 years. Whatever you do DO NOT put the money in any form of annuity or insurance policy. It is the biggest rip off and you will NOT get what you put into it. If you read any personal finance books, you will find that NONE of them recommend these products, yet most people have them. If you want more information please email me at [e-mail]. Hope this helps. Sorry it is so long.

Answer 3

well there are many factors that play in her decision. for example how old is she? how much of her total income will this investment be etc. The most general "safe" investment will be a CD ( certificate of deposit), this is a risk-free investment that can give her 5-6% return a year. The downside to this is that the issuing bank will block the amount until maturity (between 3-12 months as per agreement). Therefore she has to be positive that she will not need the money during that timeframe. However if she needs flexibility, she can go to money market saving account which will guarantee her 1-3% interest with added flexibility of withdrawing the money whenever she likes to do so.

Answer 4

since you know nothing this will get rather long.in investments there are several things that have to be considered.
risk
return
liquidity.
risk, how likely are you going to get your money back?
return/interest rate the higher the risk the higher the interest rate.
liquidity how easy is it to convert your investment to cash?
MY ASSUMPTIONS
you have reasonable income that will meet your day to day needs
you have no immediate need for this money

banks are paying nothing, so to speak. theonly way to get less than a bank is to put the bux in a can and bury it in the back yard.great liquidity, but may have a penalty
bonds, especially tax free municipals return more, good liquidity
stocks are a crap shoot. overall stocks have done great, but there are always underperformers. not a place for a novice unless you are in it for 5 years or more.
real estate great returns, lousy liquidity for first 24 months.
alternate real estate loans only way to beat these is have a buddy guido. not liquid, per se, but short term.
i favor these loans for returns, BUT you must have a good broker.
Bridge loans are loans made for the purchase of another property when your primary residenc hasn't sold, and you can't or don't want to get out of the purchase contract for a second home.
they have huge upfront fees, and a high interest rate, secured by real estate. real estate is barely liquid, and if you have to foreclose, they couldn't sell the house, why do you think you can sell the house?
when you do any alternate r e loans, make sure that the total loan to value ratio is less than 70%.
this means the existing first on the house, any seconds, lines of credit, and your loan equal less than 70% of a realistic appraisal, and the appraisal is in line with the sales price of the house.
buyer pays for appraisal and credit check.
purchase money seconds.
you want to sell me a house for 100$; i have 10$/% down, but for reasons we won't go into here, 20$/% is needed.
the seller can carry back the 10$/%, or another loan can be had for the other 10$/%. this is a purchase money second.
i want to tap the equity in my home, so i get a second mortgage.
these are the 3 highest paying legitimate returns i know of in descending order or returns.
these are all great until someone doesn't/can't pay.
if your dad was a banker, his associates undoubtedly know excellent realtors.
these realtors will know of b/c paper lenders.
listen to these people about horrer stories, before you invest.
i like remax agents for a variety of reasons, and if i were advising her, would steer her in this directions.
if you call the local board of realtors, they can give you a list of masters club members. these are the cream of the industry.
good luck

Answer 5

I would say invest in something that will give her a return of 10%+. If the investments or vehicles such as savings accounts (which pays a poultry rate of 3%) cannot come close to the 10% rate, I would say avoid them. What I would do will be to invest in what I refer to as cash-flow houses. These are houses that with 10% down you get a positive cash-flow each month. For example. Buying a duplex for $40K with rents of $700 a month and 10% down with an interest rate of 7%, you will have principal and interest payments of ~ $240 a month, assume vacancy @ 5% and property management @ 10% you will have costs of $35 and $70 respectively. Insurance and tax depending on the city could be about $107 a moth. If you set aside something for repairs - say $67 a month. You come out with about $181 which is $2172 a year in income. Assuming she paid closing costs of about $4K. So total outlay is $8K (4K for closing and 4K for down payment). The return is about 27%. Not sure about you but the last time I checked, there are very few stocks or banks giving such returns. Then on the back end, there is the tax benefits of the mortgage interest and depreciation. The next step is to keep investing and watch the 10K grow to 100K and in no time 1 million. But as it grows, I will look at investing in commercial real estate, oil and gas, businesses, etc. But I would recommend you both get educated on where and how to invest your money. Remember that the banks #1 purpose is to make money for its shareholders and not its customers.

Answer 6

Only you know your Mom's risk factor. She is not going to get rich off that $10,000 investment at 15% any more than at 6% so I wouldn't go with anything too risky or she could lose that money. Do you have any debts that you can pay off and borrow the money for your Mom at 10-12% instead of paying 15-20%? If so, have a contract written up with automatic repayment. It's a win-win situation. Because she's renting, could she put the $10,000 down on a condo and save on renting? Who knows what rent increases she'll see over the next 15 years in which she could pay off a condo and get a reverse mortgage to pay her after 15 years. If your Mom has any debts she's paying interest on, get rid of them. If buying a condo is too risky maybe buying a rental property is more in line and/or having a roommate for help. She could pay off a $60,000 loan in about 5 years with a bi monthly plan and a roommate/boarder. Now, that's a return on investment!!!

Answer 7

this will probably sound harsh but honestly at her age it depends on her health, hopefully she is in great health and had many decades to go, in which case buying an annuity from a life insurance company is probably the best way to go. If she is in moderate health she can buy a savings bond that pays yearly interest which may cover one months rent per year, or she is in poor health just keep the money in short term Cd's ($2500 in yearly Cd's invested quarterly so one always matures in 3 months)
just in case she needs it for whatever reason.

if she is better financial shape and is willing to take some risk a good bond fund like (dsu) which has paid about 10% yearly is another alternative, for a small part of her fund

Answer 8

at her age, not to sound so mean, she is at the stage of coasting along in as fluid a manner as any. she should not be looking at satiating her material needs as she would have had been over that by now, its just a question of enjoying life for the next 3 decades or so in something that would give you a return, which you can get to when a necessity or a need to satisfy an urge arises but gives you enough time to say let me think twice before i do draw on it and spend it or let me think things through if an investment scheme is well worth it or let me take a second look before i part the money for some truly sympathetic relative...i vote for a bond or a time deposit certificate. enjoy life.

Answer 9

Try term deposits, GICs,. The best thing is to go to a reputable firm - an investment brokerage like BDO dunwoody or something and get them to put together an investment portfolio of bonds, stocks, term deposits, etc.

A percentage with risk and most without.

Answer 10

you need to give some more info to get a good answer. How old is she? Does she have a mortgage to pay? What's her current financial situation? Does she work?
Before you follow any info you get from here I would suggest you re-ask the question with more info so you can get an objective, informed answer. It's a big move. You don't want to screw it up!