Hi Bogleheads,
I am seeking investing advice for my 74 YO parents who consulted with me how to invest their savings.
Their assets are:
Real estate:
Current home which they are living in ~750K worth
Additional house which they rent out ~350K (income as rent is 1250$ a month)
Total Value: 1.1M
Stocks:
US stocks of large US companies they have been holding for years (about 20 different stocks) at current value of 1050K$ (one of them is BDX stock at current value of ~300K$). Some of the stocks were bought long ago so the basis is very low compared to the current price.
Various mutual funds containing mostly growth stocks 650K $
Foreign stocks 170K
IRA 19K in NYVTX fund (Growth stocks, expense ratio 0.92%)
Total stocks: 1.89M
Bonds:
US Bonds: 110K
Foreign bonds 170K
Total bonds: 280K
Cash
Cash: 320K$
IRA: Contain 90K in cash
Total cash: 410K
Other investments:
They intended to get a payment of approx 1-1.3M in cash (after tax) from a large investment in the next year
Total other investments: ~1.1M
Total assets:
approx. 4.8M
Their monthly income from Pension funds (I have not mentioned the value of the pension funds in the assets above - they are government backed pensions that yield a steady monthly income), social security, health insurance payments, rent from the apartment mentioned above that yield approx 6-7K$ a month. They both have good health insurance.
Their annual expenses are
approx. 120K$
(approx. 75K covered by their monthly income and an additional 40-50K from savings).
They do not live a lavish lifestyle and they have 2 objectives regarding their investments:
1) To have enough money for their needs in their lifetime (considering inflation and the possibility that their expenses may go up considerably later)
2) To maximize the inheritance of the rest of their money to their children after they pass away.
Can you please advise on the following topics:
A.
What to do with over 1M$ in 20 US stocks?
Should they sell the stocks and buy low cost index funds (as VTI) and take the hit of taxes which may be very large (stocks were bought decades ago)?
Should they sell the stocks over a period of time?
Or should they just keep the stocks so their children can sell them after inheritance when the basis gets bumped up?
B.
They have about 650K in mutual funds with different expense ratios significantly larger than they would pay in low cost index funds. Would you advise to sell the mutual funds, take the tax hit and transfer to index funds? Or perhaps cancel reinvesting and invest the money that is distributed in low cost index funds? How would you go about it?
C.
One of their objectives in saving is to get the maximum return on the money they have, so they can gift/inherit as much as possible to their children.
While the general recommendation is to have a large percentage of savings in bonds at their age, they does not intend to spend large amounts of money and would prefer to maximize returns.
How much money would it make sense for them to put in bonds?
I was thinking they should invest 500K in an intermediate bond fund (BND) and put the rest in low cost index funds (VTI/VXUS), does that make sense or is it too risky for their age?
D.
Where would you recommend to invest the money that is in the IRA account?
I was thinking that it would make sense to invest in Bonds as they yield higher annual dividends that would be exempt from tax. The stocks can be invested in taxable accounts and then bump up the basis at inheritance, as they do not intende to sell them in the near future.
E.
In addition, any other advice you have to create a better investment portfolio would be very appreciated
Thanks!![:happy]( "smile")
I am seeking investing advice for my 74 YO parents who consulted with me how to invest their savings.
Their assets are:
Real estate:
Current home which they are living in ~750K worth
Additional house which they rent out ~350K (income as rent is 1250$ a month)
Total Value: 1.1M
Stocks:
US stocks of large US companies they have been holding for years (about 20 different stocks) at current value of 1050K$ (one of them is BDX stock at current value of ~300K$). Some of the stocks were bought long ago so the basis is very low compared to the current price.
Various mutual funds containing mostly growth stocks 650K $
Foreign stocks 170K
IRA 19K in NYVTX fund (Growth stocks, expense ratio 0.92%)
Total stocks: 1.89M
Bonds:
US Bonds: 110K
Foreign bonds 170K
Total bonds: 280K
Cash
Cash: 320K$
IRA: Contain 90K in cash
Total cash: 410K
Other investments:
They intended to get a payment of approx 1-1.3M in cash (after tax) from a large investment in the next year
Total other investments: ~1.1M
Total assets:
approx. 4.8M
Their monthly income from Pension funds (I have not mentioned the value of the pension funds in the assets above - they are government backed pensions that yield a steady monthly income), social security, health insurance payments, rent from the apartment mentioned above that yield approx 6-7K$ a month. They both have good health insurance.
Their annual expenses are
approx. 120K$
(approx. 75K covered by their monthly income and an additional 40-50K from savings).
They do not live a lavish lifestyle and they have 2 objectives regarding their investments:
1) To have enough money for their needs in their lifetime (considering inflation and the possibility that their expenses may go up considerably later)
2) To maximize the inheritance of the rest of their money to their children after they pass away.
Can you please advise on the following topics:
A.
What to do with over 1M$ in 20 US stocks?
Should they sell the stocks and buy low cost index funds (as VTI) and take the hit of taxes which may be very large (stocks were bought decades ago)?
Should they sell the stocks over a period of time?
Or should they just keep the stocks so their children can sell them after inheritance when the basis gets bumped up?
B.
They have about 650K in mutual funds with different expense ratios significantly larger than they would pay in low cost index funds. Would you advise to sell the mutual funds, take the tax hit and transfer to index funds? Or perhaps cancel reinvesting and invest the money that is distributed in low cost index funds? How would you go about it?
C.
One of their objectives in saving is to get the maximum return on the money they have, so they can gift/inherit as much as possible to their children.
While the general recommendation is to have a large percentage of savings in bonds at their age, they does not intend to spend large amounts of money and would prefer to maximize returns.
How much money would it make sense for them to put in bonds?
I was thinking they should invest 500K in an intermediate bond fund (BND) and put the rest in low cost index funds (VTI/VXUS), does that make sense or is it too risky for their age?
D.
Where would you recommend to invest the money that is in the IRA account?
I was thinking that it would make sense to invest in Bonds as they yield higher annual dividends that would be exempt from tax. The stocks can be invested in taxable accounts and then bump up the basis at inheritance, as they do not intende to sell them in the near future.
E.
In addition, any other advice you have to create a better investment portfolio would be very appreciated
Thanks!
Statistics: Posted by lovingknight — Tue Nov 19, 2024 4:06 am