Have 90K to invest for my parents..what should I do?

[hotfishy]

Here's the situation:

Risk tolerance: My parents is about 50 years old - suggest low risk tolerance, but if an investment is worthwhile, I can talk them into accepting moderate amount of risk....

Principle amount: about $90,000

Goal: Long term investment (as in 5 years or more) with monthly income disbursment (such as dividend, interest...etc) which serves as part of their monthly income

Looking for: An investment have return about 5 ~ 10% of return annually

I know currently GIC offers somewhere around 3 to 4 percent, and President Choice have that 4% saving acount, ING have around 3.25%, but it's fairly low return when inflation comes into play. So I wonder is there any other means to seek 5~10% for annual return?

Suggestions anyone?

[controlyar]

If you have 5+ years, there are some great mutual fund options that can be purchased on a DSC basis. Meet up with a FA so they can select the funds.

A portfolio that exposes your parents to a minimal-moderate amount of risk can defintely yield in the the 5-10% range.

Clarington has some funds that may be of interest. The funds are called Ticker funds. They guarantee the principal and lock in on a monthly basis. They are virtually risk free and invest in GOC bonds, etc.

Good luck.

[BadDrafter]

The dollar values of these posts just seem to be going up and up.

Soon we will have a post that says Have $1,000,000 to invest, what should I do? :lol:

If only life were that hard to make choices like that. :razz:

[jessejericho]

Why would your parents entrust $90k for you to go ask a bunch of people on a messageboard for advice? Why would they not go to a professional?

[bionicbadger]

if they don't need to touch the money for a while, then I would say, invest in a house in Calgary, Edmonton or Ft. McMurray and rent it out to make mortgage payments. Then when they need the money in 5+ years or whatever, sell.

[teknoluv]

Why would your parents entrust $90k for you to go ask a bunch of people on a messageboard for advice?
I have the same question too. :D

[controlyar]

The dollar values of these posts just seem to be going up and up.

Soon we will have a post that says Have $1,000,000 to invest, what should I do? :lol:

If only life were that hard to make choices like that. :razz:

I can imagine that being the case. :lol:
Soon we will get into nickels and dimes.

Point is, the OP did give some information at least.
Some of these other threads are just ridiculous.

The post to almost every thread in PF can be "go see a professional."

[deep]

I want to know how much you're charging them to ask us what to do, personally :)

[hotfishy]

I have the same question too. :D

eh...because I want to know what people think...? Many brain..better than one?

Also, constructive response is appriciated

[jessejericho]

eh...because I want to know what people think...? Many brain..better than one?

Also, constructive response is appriciated

Here is the best advice you could get: tell your parents to contact their bank, and have a professional take care of their money. You obviously don't know much about investing, and asking a forum full of strangers probably isn't your best bet either.

[sparkplug]

if they don't need to touch the money for a while, then I would say, invest in a house in Calgary, Edmonton or Ft. McMurray and rent it out to make mortgage payments. Then when they need the money in 5+ years or whatever, sell.

I'd suggest the same thing and add Grande Prairie to the list, but I'll offer something different and suggest investing in railroad company stocks. If you do your due diligence, you'll find there are many simple reasons to do it.

[roguechameleon]

Why would your parents entrust $90k for you to go ask a bunch of people on a messageboard for advice? Why would they not go to a professional?

ditto.

[Sylvestre]

first off, if they are in their 50's, that's around 15 yrs to retirement, maybe more. With that type of time-frame, I'd suggest definitely going for moderate risk.
But gotta temper that by also asking, do they have other savings? What are their retirement goals (I assume this money is for retirement)? Do they have any large commitment in the future (kids in school, forseeable medical problem etc)? You get the gist.

I disagree w/ real eastate since that's defintiely not low or med. risk right now. and it's quite a bit of leg work to make a good investment.

fact is, a well balanced but semi aggressive mutual fund would be the easiest route for someone who wants little hassle and has little knowledge.

but as others said, free advice on the net is worth what you pay for it.

[controlyar]

but as others said, free advice on the net is worth what you pay for it.

I would have to agree based on what you just recommended. :lol:
You say moderate risk although the OP clearly stated the risk tolerance for his parents. Just because they are in their 50's does not mean they are moderate risk. You cannot just decide what is best for them. For example, say if I am 25 years old...does this mean my tolerance is aggressive growth?Ofcourse not!!

They do have approx. 15 years to retirement (depends), that does not mean they have 15 years to play with. The OP clearly stated a 5 year time horizon....which obviously they have a need for the money then.

Fact is, a semiaggressive mutual fund WOULD NOT be best for someone who has little hassle and/or little knowledge. How can you make such a blanket statement? That is ridiculous. What if they are completely risk averse? What you stated is not a fact at all. It is a misinformed PERSONAL opinion.

The only thing I agree with what you wrote is that real estate would not be the best choice.

[Sylvestre]

I would have to agree based on what you just recommended. :lol:
You say moderate risk although the OP clearly stated the risk tolerance for his parents. Just because they are in their 50's does not mean they are moderate risk. You cannot just decide what is best for them. For example, say if I am 25 years old...does this mean my tolerance is aggressive growth?Ofcourse not!!
They do have approx. 15 years to retirement (depends), that does not mean they have 15 years to play with. The OP clearly stated a 5 year time horizon....which obviously they have a need for the money then.

1)Did you not read my subsequent paragraph, after the first line? It begins with "But gotta temper that by also asking..."


Fact is, a semiaggressive mutual fund WOULD NOT be best for someone who has little hassle and/or little knowledge. How can you make such a blanket statement? That is ridiculous. What if they are completely risk averse? What you stated is not a fact at all. It is a misinformed PERSONAL opinion.
a well balanced semi-aggressive mutual fund falls under the definition of medium risk. and if that's not mid risk, low hassle and for ppl w/ low knowledge, please, feel free to suggest what is?
Don't confuse personal w/ general. What I said was a general statement that suited precisely what the OP asked for.

[controlyar]

a well balanced semi-aggressive mutual fund falls under the definition of medium risk. .

This is not what you stated.
This is what you wrote originally.

fact is, a well balanced but semi aggressive mutual fund would be the easiest route for someone who wants little hassle and has little knowledge.

They are two different statements. Semi aggressive mutual fund is not the easiest route for someone with little hassle/little knowledge b/c it does not take into consideration their risk tolerance. I am sure you know the difference but, you stated otherwise.

In addition, I still do not agree with your re-worded statement. A semi aggressive is not medium risk. A moderate mutual fund is considered medium risk. Anything with the word aggressive immediately spells out "not medium risk" however you put it.

Call it picky...but it is the truth.

[arnyk]

Here's the situation:

Risk tolerance: My parents is about 50 years old - suggest low risk tolerance, but if an investment is worthwhile, I can talk them into accepting moderate amount of risk....

Principle amount: about $90,000

Goal: Long term investment (as in 5 years or more) with monthly income disbursment (such as dividend, interest...etc) which serves as part of their monthly income

Looking for: An investment have return about 5 ~ 10% of return annually

I know currently GIC offers somewhere around 3 to 4 percent, and President Choice have that 4% saving acount, ING have around 3.25%, but it's fairly low return when inflation comes into play. So I wonder is there any other means to seek 5~10% for annual return?

Suggestions anyone?

Sorry to say that 5 years is basically money market/GIC territory. Between 5-10 years you can start going into high quality bonds, and preferreds, but that's about it. I wouldn't recommend any equities until your time frame extends well beyond 10 years. This is using a conservative profile, given your parents' age.

Conventionally, you could probably go as high as 50% equity at year 10, declining to 0% by year 5.

[forgamez]

Here's the situation:

Risk tolerance: My parents is about 50 years old - suggest low risk tolerance, but if an investment is worthwhile, I can talk them into accepting moderate amount of risk....

Principle amount: about $90,000

Goal: Long term investment (as in 5 years or more) with monthly income disbursment (such as dividend, interest...etc) which serves as part of their monthly income

Looking for: An investment have return about 5 ~ 10% of return annually

I know currently GIC offers somewhere around 3 to 4 percent, and President Choice have that 4% saving acount, ING have around 3.25%, but it's fairly low return when inflation comes into play. So I wonder is there any other means to seek 5~10% for annual return?

Suggestions anyone?


I concur that you need to go see a professional FA to seek their guidance. But i think there is nothing wrong for the OP asking for suggestions on this forum. I don't think the OP would want to walk into the FA's office and know nothing about the types of financial products which are suitable for his parents. His meeting with a professional FA would go much smoother if he has done his own due diligence on the suitable financial products that are avaliable on the market.

My suggestion:

1. Based on a low risk tolerance and a five year time horizon, you are limited in your investment options. (ie. probably stick with government debt, AAA corporate debt, money market funds, GIC's, or maybe low risk mortgage back securities) Since your realm of investment products are all low in risk, I highly doubt that you will be able to make a return higher than 6 or 7%. Therefore, keep this in mind and don't set an unrealistic average rate of return in your mind when going through this investment process.

2. Any mutual fund which is 100% in stocks is almost certain to be not appropriate for your parents. I would not even suggest investing in preferreds. A good FA would interpret low risk tolerance as valuing safety of prinicpal as the most important goal for the client. Sounds like your parents want these things in this order, 1) safety of principal + peace of mind 2) income distributions 3) capital growth. Be sure to check over the portfolio of the mutual funds the FA suggests to you. Make sure it fits in with your parents objectives.

3. As another pointed out, it is important to consider what other existing investments your parents presently have, and the financial situation they are in. (ie. what other investments are in their existing portfolio, do they have a mortgage still, etc.) You must look at the big picture to see how it all fits in.

4. If you go to an FA, they will almost certainly suggest you to buy a mutual fund. They will almost certainly suggest you purchase units of a fund run by their bank. Make sure that the funds they are suggesting have low MER. (Preferably lower than 1%) The MER is almost as important as the investment s in the portfolio itself.

[controlyar]

(Preferably lower than 1%) The MER is almost as important as the investment s in the portfolio itself.

Placing too much emphasis on MERs is unnecessary. Lower than 1%? Difficult to find on a solid fund (not saying it isnt possible). In addition, MERs should be overlooked sometimes because the returns are always quoted after deducting the MER. So in essence, even if the MER is 4% and the fund still yields 7%, then why not? Investors get too caught up with these costs. As long as the fund performs, the MER should be viewed with slight importance and NOT the deciding factor as to whether or not you invest in the fund.

[Sylvestre]

This is not what you stated.
This is what you wrote originally.
They are two different statements. Semi aggressive mutual fund is not the easiest route for someone with little hassle/little knowledge b/c it does not take into consideration their risk tolerance. I am sure you know the difference but, you stated otherwise.
In addition, I still do not agree with your re-worded statement. A semi aggressive is not medium risk. A moderate mutual fund is considered medium risk. Anything with the word aggressive immediately spells out "not medium risk" however you put it.
Call it picky...but it is the truth.

fair enough, we'll agree to disagree.

[dav1209]

best GIC rate right now is 4.8% for 5years ...close enough to 5% u asking 4

[maniacshopper]

Depends on what kind of return are you expecting? If you are expecting above 5% return, go with income trusts, it will generate income and capital appreciation. If about or less than 5%, then GIC is your safest best. Remember it depends on your risk tolerance and expected return. Are you parents retired? Do they have other assets that will be available, because if you lock the money in a GIC, it is inaccessable till maturity. You have to factor in expected future interests. Do you think rates will go up, if they do then you might not get a good deal now.

Do some more research. If you are still not confident, seek financial advice by seeing a financial planner, don't go to the banks, their job is to sell you their products. There may be other products better than theirs, they have to meet their monthly quota.

Practice due diligence, it's your parents' money not yours.

[forgamez]

Placing too much emphasis on MERs is unnecessary. Lower than 1%? Difficult to find on a solid fund (not saying it isnt possible). In addition, MERs should be overlooked sometimes because the returns are always quoted after deducting the MER. So in essence, even if the MER is 4% and the fund still yields 7%, then why not? Investors get too caught up with these costs. As long as the fund performs, the MER should be viewed with slight importance and NOT the deciding factor as to whether or not you invest in the fund.

Your statement maybe true for an aggressive mutual fund or hedge fund, which, if well managed, can make 20-25% annually. However, his parents are not going to be investing in funds will most likely not make large annual returns, due to the low risk and income objectives. The returns he will most likely be getting will be 5 to 6%. So if MER is around the average of 2 to 2.5%, he will only be making 3 to 3.5%. If that is the case, why bother with a mutual fund, when you could get the same return in a riskless GIC.

And I suggested looking for MER lower than 1% because his parents will most likely be looking at bond funds and income funds. These funds should not be charging the same MER as equity funds.

Lastly, I am sure you are aware of compounding interest, so I am sure you understand that even an extra half percent in return (or half a percent in cost savings) can mean a great deal of money in the long term.

[forgamez]

This is not what you stated.
This is what you wrote originally.



They are two different statements. Semi aggressive mutual fund is not the easiest route for someone with little hassle/little knowledge b/c it does not take into consideration their risk tolerance. I am sure you know the difference but, you stated otherwise.

In addition, I still do not agree with your re-worded statement. A semi aggressive is not medium risk. A moderate mutual fund is considered medium risk. Anything with the word aggressive immediately spells out "not medium risk" however you put it.

Call it picky...but it is the truth.

What you said is true. Although it is semantics, anything with the word aggressive cannot be considered medium risk in the industry. (Although I did think the same way before) If I had considered semi aggressive as medium risk, I would have failed all my NASD exams.

[st7860]

Here's the situation:

Risk tolerance: My parents is about 50 years old - suggest low risk tolerance, but if an investment is worthwhile, I can talk them into accepting moderate amount of risk....

Principle amount: about $90,000

Goal: Long term investment (as in 5 years or more) with monthly income disbursment (such as dividend, interest...etc) which serves as part of their monthly income

Looking for: An investment have return about 5 ~ 10% of return annually

I know currently GIC offers somewhere around 3 to 4 percent, and President Choice have that 4% saving acount, ING have around 3.25%, but it's fairly low return when inflation comes into play. So I wonder is there any other means to seek 5~10% for annual return?

Suggestions anyone?


TDBANK offers a stock linked GIC. on a 3 year contract, the return is limited to up to 20%. on a 5 year contract, the return is limited to 60%.

the principal(but not the interest) is guaranteed by the BANK.