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caulfield12

Investment Advice

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Took some money out of the stock market (mutual funds) recently, wanted to get some friendly advice about where to reinvest it.

Time horizon: 3-5 years

Issue:  Generating cash for my mother's long term care treatment....she is 90 years old with pretty advanced dementia/symptoms of Alzheimer's but otherwise in good health for that age

Amount: $200-250,000

Essentially, it costs about $55,000 per year for her care....maybe $62,500 total if you include doctor/dentist/snacks/prescription medicine, etc.   She currently has enough money in her bank accounts to cover at least the next 3 years, because of money coming in from my dad's (deceased) partial pension, other investments (go Vanguard!) and a limited amount of Social Security (she worked mostly in 1950's-1970's so the amount is pretty small.)

Rate of return on investments, cumulatively:  roughly 9% per year since 2000

 

Some ideas for generating additional revenue to offset future expenses from 2022-23 onwards:

Option 1:  2.48% interest on a 25 month CD (barely will keep up with inflation, if that)

Option 2:  REIT

Option 3:  Renting out house (I live in China and stay in US for basically 4-6 weeks per year, doing this is probably a "no go" from my mom's perspective anyway)

Option 4:  Reverse mortgage (home owned outright, but needs a lot of work, would probably sell for $125Kish)

Option 5:  Selling house

Edited by caulfield12

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Have you looked into reverse mortgage? From my limited knowledge it seems ideal in her situation depending on sale price.

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13 hours ago, Texsox said:

Have you looked into reverse mortgage? From my limited knowledge it seems ideal in her situation depending on sale price.

I'm just not seeing the advantage of doing that, rather than simply selling the house outright...right now, she's having to pay for mowing, snow removal, homeowner's insurance, plus we have to keep the gas/water/lights on in order for the insurance to cover the house while nobody's occupying it.

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21 hours ago, caulfield12 said:

 

Took some money out of the stock market (mutual funds) recently, wanted to get some friendly advice about where to reinvest it.

Time horizon: 3-5 years

Issue:  Generating cash for my mother's long term care treatment....she is 90 years old with pretty advanced dementia/symptoms of Alzheimer's but otherwise in good health for that age

Amount: $200-250,000

Essentially, it costs about $55,000 per year for her care....maybe $62,500 total if you include doctor/dentist/snacks/prescription medicine, etc.   She currently has enough money in her bank accounts to cover at least the next 3 years, because of money coming in from my dad's (deceased) partial pension, other investments (go Vanguard!) and a limited amount of Social Security (she worked mostly in 1950's-1970's so the amount is pretty small.)

Rate of return on investments, cumulatively:  roughly 9% per year since 2000

 

Some ideas for generating additional revenue to offset future expenses from 2022-23 onwards:

Option 1:  2.48% interest on a 25 month CD (barely will keep up with inflation, if that)

Option 2:  REIT

Option 3:  Renting out house (I live in China and stay in US for basically 4-6 weeks per year, doing this is probably a "no go" from my mom's perspective anyway)

Option 4:  Reverse mortgage (home owned outright, but needs a lot of work, would probably sell for $125Kish)

Option 5:  Selling house

You can get 2% interest with just a savings account on capital one 360. Can access it whenever and no fees. 

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3 hours ago, joejoedairy said:

You can get 2% interest with just a savings account on capital one 360. Can access it whenever and no fees. 

At a Chase bank you can get 2.25% for 9 months in a CD. No need to go another 16 months for just .23%. I like your idea though. Ally has some pretty good savings account rates.

 

On ‎7‎/‎22‎/‎2019 at 1:59 PM, caulfield12 said:

 

Took some money out of the stock market (mutual funds) recently, wanted to get some friendly advice about where to reinvest it.

Time horizon: 3-5 years

Issue:  Generating cash for my mother's long term care treatment....she is 90 years old with pretty advanced dementia/symptoms of Alzheimer's but otherwise in good health for that age

Amount: $200-250,000

Essentially, it costs about $55,000 per year for her care....maybe $62,500 total if you include doctor/dentist/snacks/prescription medicine, etc.   She currently has enough money in her bank accounts to cover at least the next 3 years, because of money coming in from my dad's (deceased) partial pension, other investments (go Vanguard!) and a limited amount of Social Security (she worked mostly in 1950's-1970's so the amount is pretty small.)

Rate of return on investments, cumulatively:  roughly 9% per year since 2000

 

Some ideas for generating additional revenue to offset future expenses from 2022-23 onwards:

Option 1:  2.48% interest on a 25 month CD (barely will keep up with inflation, if that)

Option 2:  REIT

Option 3:  Renting out house (I live in China and stay in US for basically 4-6 weeks per year, doing this is probably a "no go" from my mom's perspective anyway)

Option 4:  Reverse mortgage (home owned outright, but needs a lot of work, would probably sell for $125Kish)

Option 5:  Selling house

I work with a JP Morgan advisor and he can simply do things that other companies can't. I've worked with a Pacific Life, Vanguard, Northwestern Mutual and T Rowe Price advisor and this guy at JPM blows them out of the water.

I know that there are some fixed annuities out there for 3.4%+ for 5 years. Of course there's no liquidity but if you did need the funds the only penalty is loss of principal.

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I ended up parking $150k in a CD that pays twice a year at 2.5%

Have to keep it in for 25 months (25th anniversary of local bank here).

Wish I could go back to that time in China about 4-5 years ago when my wife through her insurance company could get a CD guaranteeing 8%, but (already) there was a limit to the amount you could put in, something like $50,000.   Last time we did it, it was only 3%.

 

Edited by caulfield12

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4 hours ago, caulfield12 said:

I ended up parking $150k in a CD that pays twice a year at 2.5%

Have to keep it in for 25 months (25th anniversary of local bank here).

Wish I could go back to that time in China about 4-5 years ago when my wife through her insurance company could get a CD guaranteeing 8%, but (already) there was a limit to the amount you could put in, something like $50,000.   Last time we did it, it was only 3%.

 

What about muni bonds? There are some relatively low risk funds that should have minimal downside and tax adjusted could get you 4 percent or so. 

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52 minutes ago, Chisoxfn said:

What about muni bonds? There are some relatively low risk funds that should have minimal downside and tax adjusted could get you 4 percent or so. 

Thanks for the idea...at this point, I'm okay to control the risk completely if it's just a matter of a couple of percent.   Over 20 years, that would make a huge difference, obviously.

The rest is in individual stocks, mutual funds (Vanguard, Legg Mason, Oakmark, Fidelity), so I think it's okay if the major portion of the portfolio can keep trucking along at 6-10% per year.   I actually don't believe that we're likely to keep seeing such high returns over the next decade, and am prepared to deal with the likelihood it's going to be 4-6% as the new normal for quite some time.

Who knows?  Nobody thought three years ago that this would continue as long as it has, but I've seen enough warning signs (the canary in the coal mine) living in China for most of the last decade to know the days of "easy money" are long gone and things are quickly tightening up.

Maybe the biggest example to me was three huge bicycle rental companies in China with billions of dollars of venture capital flowing into them while 90-95% of the bikes were haphazardl lying around the subway entrances and street corners blocking traffic and creating a huge eyesore everywhere you go in Tier 1 and Tier 2 cities.  At that point, they were talking about renting umbrellas and basketballs, even.  Now the buzz word is click farms...to drive traffic, to create the illusion of traffic or positive reviews or whatever they are programmed to fake in order to create value out of nothing.

https://finance.yahoo.com/news/click-farms-internet-china-154440209.html

What's amazing is how much effort goes into faking everything when it would be easier to invest in an education system that teaches creativity and innovation, rather than replication and reverse engineering.

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On 7/23/2019 at 10:54 AM, caulfield12 said:

I'm just not seeing the advantage of doing that, rather than simply selling the house outright...right now, she's having to pay for mowing, snow removal, homeowner's insurance, plus we have to keep the gas/water/lights on in order for the insurance to cover the house while nobody's occupying it.

I missed the part where she's not living in it. I agree, it doesn't make sense.

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Not sure how big a score you need but you could always invest a few grand in a person or persons.   Find some skilled trade people with integrity and help them out & set them up with a biz.  That’s the only way I know how to get giant rips: people.  

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1 hour ago, Jerksticks said:

Not sure how big a score you need but you could always invest a few grand in a person or persons.   Find some skilled trade people with integrity and help them out & set them up with a biz.  That’s the only way I know how to get giant rips: people.  

Yeah, would love to but tricky to effectively monitor investment from half a world away...in China, there’s a saying, never trust anyone to run your business, sometimes not even your own family.

Edited by caulfield12
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Chinese RMB to USD finally breached the mythical 7 mark that everyone in the finance community has been worried about...

What does everyone think, we avoid recession next year or not?

With the Fed lowering interest rates, and China taking a bite out of the (anticipated) impact from higher tariffs by devaluing their currency, it will be interesting to see what transpires.

Personally, I think both sides now are so entrenched that there won't be a solution until well into election year, with the one caveat being that the ONE thing that's predictable is that the president will eventually back off if the stock market falls so far that there's blowback coming in his direction.


This time around, in the short term, feel fortunate to have moved 20-25% of portfolio back into cash/CD's.

 

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