You wouldn't want to use a target retirement account with their age if you want something 10-15 years from now, as they're too high-risk. Or if you do go with something like that, don't put all the money in it. You'll want to go with a good chunk of it in bonds, as they're much lower risk. The target retirement accounts will normally grow 5-10% each year where as bonds will only grow 1-2% a year. But bonds are damn near a guarantee for that amount whereas the target retirement accounts could easily lose that much instead (which is what happened for 2018 as a whole).Smith Corks One wrote:Looking for some advice...I've been thinking lately about my parents' financial situation, which isn't great. Well, it's okay for now, because my dad has a pension, but when he dies, that ends. My mom will have no income except for a tiny amount of social security. They don't have much in savings, maybe low to mid 5-figures. They own their house outright, and another house they are renting, but that's about it for assets.
He's 68 and she's 65, and given their family histories, I expect her to outlive him by quite a bit. I mean, his health isn't bad, and I think 10-15 more years isn't a stretch for him, but most people in my mom's family live into their late-80's or even early 90's. Bottom line is I think she'll be around for a number of years after he's gone, with virtually no income. He does have a term life insurance policy, but it ends when he's like 72 or 73.
So what I was thinking about was talking to my 3 siblings and seeing if they would be interested in opening some kind of investment account now for my mom to have once my dad is gone. It would be best if it was something we all could add money into instead of having to go through one person. And I would want it to be something we could add to at any time as opposed to a set amount being put in each month. I guess a savings account would be one option, but there's really no interest with that. I'm just wondering if there's something that could earn a decent amount of interest over say 10-15 years. Maybe one of those Vanguard target retirement accounts, and set it for 10 or 15 years? Would that meet the parameters I've outlined?
Really a dunce when it comes to investing...it's something I've only recently started looking into even for myself, so any suggestions would be appreciated!
One option if you don't want to go the mutual fund route would be American Express's high yield savings accounts, which is insured against loss just like any other bank account. They've recently started promoting them, which carry a whopping 2.10% interest rate. Compared to most bank savings accounts, that is incredible (our USAA savings account has a nice 0.01% interest rate). 2% interest won't earn you a ton, but you won't lose it all either. And you can easily contribute money from multiple sources, either from scheduled auto-debits or whenever you feel like it. I don't think it carries a minimum balance fee/requirement, either.