Investment Options (income)

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Aug 24, 2006 10:18 am

I would love to hear some opinions on a scenario that I have been presented with.<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />


 


My family has decided to move my grandmother into assisted living.  The assisted living facility costs between $2,300-$2,600 per month.  Her current monthly income is right at $2,000, therefore there is a gap of $300-$600 per month.  She has $100,000 cash to use to make up the income gap.  I know there are many different options available to fulfill her income gap and am curious what you all think would be the very best option. 


I look forward to your insight.  Thank you in advance.


Chris



Aug 24, 2006 10:21 am

The best option is for her FAMILY to cover the spread. She's put up with you people all of your lives and deserves a demonstration of appreciation.

Aug 24, 2006 10:29 am

My parents are in assisted living--they're spending about $5,500 per month.  Do you think your grandmother could use some new friends in her low cost place?

Aug 24, 2006 10:32 am
NASD Newbie:

My parents are in assisted living--they're spending about $5,500 per month.  Do you think your grandmother could use some new friends in her low cost place?



good sensitivity training there bub


Why not send the dog or wife,  I'm sure they'd appreciate the greater intellect at the residence

Aug 24, 2006 11:02 am

In response to our resident dickhead, the $2,600 is actually higher than the average cost of assisted living in my city.


Anyone have any actual insight on income options for her? 

Aug 24, 2006 11:06 am
ChrisB:

In response to our resident dickhead, the $2,600 is actually higher than the average cost of assisted living in my city.


Anyone have any actual insight on income options for her? 



Come on kid, you can't figure out how to make $300 per month with $100,000 to invest?

Aug 24, 2006 11:09 am
ChrisB:

In response to our resident dickhead, the $2,600 is actually higher than the average cost of assisted living in my city.


Anyone have any actual insight on income options for her? 



You're a CFP, aren't you? Figures.

Aug 24, 2006 11:13 am

Jeez people. 


I know exactly how to do it I am just wondering what you all think the best option would be.


f**k this lame ass forum.

Aug 24, 2006 11:28 am

You're talking about your grandmother--I suspect that Pork Bellies would be inappropriate.


Additionally your anger comes through all the time--you may not believe this, but there are a lot of people here who think you're the dickhead rather than me or anybody else who says anything that offends you and your senstive feelings.


Get the chip off your shoulder punk, it's going to sink you before you're old enough to need to shave.

Aug 24, 2006 11:59 am

Classy. 

Aug 24, 2006 12:07 pm
ChrisB:

Classy. 



I'm sorry your grandmother's grandson lacks the knowledge and confidence to help her. I'm sure she'd be quite ashamed to find out that he had to go to an internet message board to get advice on what to do with her money. Be a big boy and refer her to someone who is up to the task.

Aug 24, 2006 12:18 pm

If your "hypothetical grandmother" case were in front of me these are the questions I would ask and things you need to consider.



How old is your grandmother. What do you think her life expectancy is based on her current health and family history
Does she have a trust or living will
What do you think are the chances of her needing more than just assisted living is going to be in the future
How much do we think inflation is going to increase the cost of her care over time.  In both the assisted living facility and in possible medical costs.
What kind of health insurance coverage if any does she have if she should have major medical costs
Do the assisted living costs you are anticipating cover her other needs such as medications and personal needs such as clothing and luxuries.
Is this the only asset she has or are there other sources to provide income for the shortfall
Does she own a home and is she ever going to occupy it again. How much equity is there in the home.
What other family members are involved and how do they feel about this situation and what are their sources and inclination to help out.

Those are just a few.  Until I were to know the answers to those questions, there is no way to devise an appropriate strategy.

Aug 24, 2006 12:21 pm

Wow.  Proofreading is an important task.  Sorry!!!

Aug 24, 2006 12:36 pm

CDs, FNMAs, T-Bills, high dividend yielding stocks managed for risk with stop losses. Of course you will still loose on the stocks if they gap down.


With the 30 seconds of thought I have put into this how about a combination of the above.  All have their advantages and disadvanages so how about 25% into each category.  


After 60 seconds of thought I am now thinking 75% CDs even though cash flow might foul you up some and then 25% high dividend yielding stocks with stops at say 5% if she has some years to live so you can get some growth.  SOme of these MLPs look nice although the K1s will drive you all nuts.


Aug 24, 2006 1:04 pm

Make her a ward of the state and you and your family will be WORRY FREE! 

Aug 24, 2006 1:47 pm

Malcolm, that is exactly the plan that I am leaning toward most.  For now I am likely going to use about 60-70% CDs, and 30-40% preferreds. 


Knucklehead, I already stated that I am fully aware of how to do it, I simply asked to see if there were some options I hadn't thought of.  Get over yourself.



Aug 24, 2006 2:05 pm
NASD Newbie:
ChrisB:

In response to our resident dickhead, the $2,600 is actually higher than the average cost of assisted living in my city.


Anyone have any actual insight on income options for her? 



Come on kid, you can't figure out how to make $300 per month with $100,000 to invest?



At least NASD Newbie has figured out his new "resident" moniker

Aug 24, 2006 2:06 pm

So, you aren't interested in inflation protection strategies?  Are you going to ladder CD's in this interest rate environment or go with a short term CD strategy and expect that interest rates are going to increase.  If so how do you think that will affect the valuation of the preferreds?  I assume you are using par bond/preferreds with a stated maturity, fixed coupon and a call date and not other types of preferred stocks .


Had you thought about a split annuity concept. A SPIA for a portion of the funds and put the rest where it could have some growth potential?  A SPIA would give a much higher income (and yes deplete the principal of the SPIA) for the term chosen and allow you to reinvest dividends and income on the remaining portion. 


How about bonds with a death put on it in case grandma kicks off before the maturity of the investments?   How about TIPS for a portion.  The coupon is comparable to a short term CD with some inflation protection.  Do you not think we are going to still have inflationary pressures in the future?


Have you looked into something that would give a rising income in a rising interest rate environment such as a Senior Floating Rate Fund?


If you put her 100k into a fixed portfolio, how are you going to be able to accomodate her needs of/when she goes into medical long term care instead of assisted living and the cost of the facility is twice what it is now?


What happens to your investment strategy when/if she needs to be using Medicaid because her income isn't enough to cover the rising cost of long term care?


If she has a home and goes on the Medicaid strategy what happens to the value of that? It is attached by the State with a lien in the amount of the Medicaid benefits received, so that when Grandma eventually dies the heirs are forced to sell and pay the lien.  (That's how it works in my State)


Yep, there might be a few options you haven't thought of.


Aug 24, 2006 2:26 pm
babbling looney:

in case grandma kicks off



I am constantly amazed at this forum's ability to deliver insightful advice while remaining completely insensitive and unprofessional.

It's his grandmother, Looney.  Is nothing sacred to you?


Aug 24, 2006 2:32 pm

I thought it was a hypothetical case.  I apologize if it truly is your Grandmother for the insensitivity.  


Even so, you still need to think about the unthinkable.