investment mix for my 81 year-old mother’s portfolio — Bonds??
My mother, Judy, has approximately $100,000 in an investment portfolio. My brother thinks it’s a good idea to put a big chunk in bonds. Then I heard you talking today on WGN and advise a 63-year old woman not to put her 401K money into bonds. What do you think for an 81 year old? Her portfolio is currently made up of the following: Vanguard Equity Income Fund Investor’s Shares – $3500. Vanguard Wellington Fund – $6000; Money Market Fund – $30,000; ITW stock – $55,000.
She also has income of approximately $3000 per month in Social Security and a military pension and lives on this. Her 100K is there for emergencies and vacations. Thanks for any advice you could provide! We love listening to you!
Terry Says
Please show this column to your brother: Beware of Bonds It explains the general concept of the impact of rising interest rates on bond prices. When rates rise — bond prices FALL!
Falling bond prices are not a problem — unless you need to sell the bonds for an expense that cannot be covered in any other way. Then she could take a loss. Otherwise, she would be stock with low yields for the duration of the bond portfolio.
Just in general, I think your mother has a nice, diversifed portfolio as is — with plenty of liquidity in her MM fund allocation. And I assume the ITW stock comes from long ago — so you wouldn’t want to sell it and pay taxes (instead if the step-up tax provision is in force when she dies, the money will come to her heirs without paying any taxes).
I hope your brother sticks to managing his own portfolio. Keep him away from managing your mother’s account!
