Q: My 95 year old father recently lost about 20% of his (stocks and bonds) portfolio which he had invested through a local agency. We know we are facing long-term care issues with him in the near future. Should we ride this out (as the investment broker is advocating) or invest in something more stable, like CDs? -- Bballmom1555A: Without knowing the full financial picture of the 95 year old father, it’s difficult to state whether the advice to “ride this out” is appropriate or not.
The S&P 500 fell 23.2% over the months of September and October and the Lehman Aggregate Bond index fell 13.8% over the same two month period.
A loss of 20% of one’s portfolio is an average return for this time period.
To say whether a 95 year old man should be invested in the market, though, depends on a number of things – like how much of his assets are invested in this stock / bond portfolio? What is the present allocation of the stocks and bonds? How much of his assets are in cash or cash-equivalents? Are there sufficient funds to cover his initial long-term care expenses you are anticipating in the near future?
If this concerned child feels her father’s assets are not being properly managed, my best recommendation would be to consult with another financial advisor who can thoroughly review the father’s assets and income needs and offer a second opinion.
This reply is from Tim Ellsworth, who is a Financial Advisor with SpiritBank’s Wealth Management group
