Portfolio for retirees?

Question

I'm no expert in finance, but my parents have even less expertise and seem to have far too much of their retirement funds in CDs (at least 50%). Generally speaking, what is a sensible mix of CDs/Bonds/Equities for retirees (age 67 with above average retirement savings)?

Answer 1

Morgan Stanley has a really good asset allocation strategy that is based on their age and amount of funds to be invested. I've worked with their reps before and they have a good handle on the allocation decision. Typically, at 67, you want to be defensive while taking advantage of market upswings. I don't know the best allocations strategy, as I don't know their personal situation, but there are annuities that could return a decent amount to your parents while still being fairly defensive. Laddered CDs are also a good way to go when you know how much money you will need over a 5 - 7 year period (and they are FDIC insured). In general, I would stay out of small/mid cap equities and invest maybe 20-30% in large cap equities (blue chips if possible). I would also put 30-40% in bonds and annuities of various maturities...try to match the payout with future liquidity needs. I would also do 20-30% in money-market and CDs. If there is any left over, I would invest in managed futures, which are counter cyclical and would provide an anchor and short term cash in case of a market downturn (it would let them ride out a downswing so they might recognize gains from other investments when the market goes back up).

My advise...talk to a professional.

Answer 2

First, it is not the worst thing that have their money in CDs, it is just not the best use for it. You parents should be a little more diversified. If your parents are 67, I would move some of their money out of CDs and into some high yield bond funds and maybe into some mutual funds. I would really stay away from stocks, ETFs, or risky mutual funds (overseas and emerging markets). As people get older, they should be moving more of their money over into safer investments like bonds, and some large cap mutual funds. These things are less volatile and are not going to to put a crunch into you parents portfolio when something like this past week happens to the stock market.

Answer 3

Look for mutual funds that have a balanced portion of stocks and bonds. Never leave it in CD's . Banks are ripoffs when it comes to your money. Sit down with a financial planner that is not in association with a bank. You may want to sit down with more than one to get different opinions. Some will offer you a fixed annuity, but that is not the best solution. The institution makes more money off you when your finances are in fixed products, which is why banks make so much money. I would suggest that you put it in a balanced mutual fund that focuses on income. That way you can live off the interest. If you have anymore questions you can email me at [e-mail]

Answer 4

I'd suggest they keep/put a healthy portion in some good, diversified stock mutual funds. Even at their age, they need their money & income to grow.

People seem to always overestimate stock market risk and underestimate inflation risk.

According to some very intelligent financial professionals, at least 50% of their portfolio should be invested in equities (even at their age).

Answer 5

My first suggestion is to read up on "asset allocation" and work out an plan that works well with your parents anticipated needs vs. their risk tolerance.

An example of one would be;
(understanding I don't know a thing about them)
20% Large Cap
10% Mid and small cap
10% Large Cap International
30% Bond portfolio
30% CD's

Note: I made this up. I (and no one else on this board) can tell you what's best.

PLEASE DO NOT USE SOME COOKIE CUTTER ANSWER TO THIS QUESTION. YOU MUST INDIVIDUALIZE THIS!!!!!!!
Do not use a bank or insurance company to help you with this. A broker or fee paid adviser can assist...... but ultimately you're better off doing this yourself (with your parents).

Also: Stay clear of variable annuities.

Answer 6

I in simple terms examine a piece of writing interior the WallStreet magazine that asserts that the Federal financial employer is starting to be a synthetic bubble for the inventory marketplace. in actuality, this implies that they are pumping funds into the inventory marketplace to make it look that it particularly is starting to be, while in actuality, there is not any important improve. as quickly as this inventory marketplace bubble bursts, the fee of fairness's will drop severely. as quickly as this occurs, the greenback would be properly worth much less. while this occurs, commodities including gold will improve. i might surprisingly propose making an investment in gold at present, because of the fact it particularly is in basic terms an issue of time earlier the marketplace comes backtrack. i might additionally propose you to purchase ETF's and short term bonds, because of the fact those are much less risky.

Answer 7

at their age..
Money Market Certificates ( check rates)
some short term CD's
T bills rolling over every 13 weeks
IRA's