My mother-in-law is still working but has no retirement account. She does receive SS pension of about $800 per month. What would be a good account to open? Roth IRA? Brokerage? Other account? She does not ever touch the penson from SS, at least not in the last 12 months. Is it too risky if it is Roth IRA?
Opening an imvestment account for a 77-year old
byu/gmredand ininvesting
Posted by gmredand
8 Comments
She’s 77. Probably a high yield savings account because she doesnt need her money locked up in the market. She’s won’t have the luxury of decades of compounding interest
She will have problems opening a n account online because of her age. It is a risk to the broker.
But the plan should always be the same. Have emergency fund. VOO automatically and weekly, sell when you have something urgent to pay for. Crazy to seek volatility first time at that age. Best of luck though.
At that age portfolios should be shifted away from stocks to avoid volatility. I agree with the other commentator who recommended sticking with a High Yield Savings. A money market account is another option
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If she’s still working at 77, either she really loves her job and does it for reasons other than money, or she can’t afford to pay for regular living expenses without it.
If it’s the former, then a Roth is fine. She can be as conservative or as aggressive as she wants within it. If it’s the latter, she needs a HYSA.
Broker account and maybe some bond ETFs. That’s even if you want to risk it. High yield money market is the move at this age.
How much does she have to invest? Is this a lump sum that has been sitting in a savings account? How bad will things get for her if she invests and the market crashes by 40%? If she has some money she can spare and feel comfortable not having access to for 3-5 years, I would help her open a regular brokerage account or a Roth IRA at Vanguard, assuming you are willing to assist or manage her online investments. Roth IRA withdrawals will be tax free, but keep in mind that the account has to be open five years before she can withdraw earnings (she could withdraw her contributions any time though). So a brokerage account might be better — you’d have to discuss it with her and see what she wants to do. She likely has a life expectancy of at least another ten years, so keep that in mind.
**I would invest no more than half of her money in anything with equity**. And even for that half, I would look at a balanced fund with at least 40% bonds. Vanguard has excellent balanced funds: VWELX, VSMGX, and VSCGX would be at the top of my list.
For the other half of her money, if she needs quick access to it, I would use a high yield savings account, put it in a Vanguard money market fund, or buy SGOV or VBIL.
If she really wants a place with physical branches rather than just doing online or telephone access, go to Fidelity or Schwab. You could buy the same Vanguard funds there but it will cost additional fees to do so, so instead look at FBALX, FSANX, or FRYBX (Fidelity) SWOBX (Schwab) or AOR, AOK, or CGBL (either place).
Keep in mind that for an IRA (traditional of Roth) you need earned income (wages of from a business).