My Grandma's portfolio.

D

Debaser82

My grandma sold her appartment as she is in a retirement home now.

After putting away some cash for covering expenses the next years (her pension only covers 1/2 of her expenses) and cash to pay for inheritance rights (it's a reality...) she has about 100K USD coming available to invest.

I was thinking about employing it the following way. The goal is to support her day to day expenses somewhat and not lose to much of the principal but I guess everyone wants that...

- 10K in the Nikkei. (I see there are small cap Japanese indexes too?). Nikkei has been dead for 20 years, if the Yen rises we do good, if the Yen tanks stocks could compensate for it.)

- 10K in a broad emerging market index.

- 10K in a emerging market of choice (Vietnam, India, Egypt?).

- 10K in the S&P.

- 10K in a local telephone company that pays a great dividend

- 10 K in a foreign corporate bond (but what currency the Euro tanked against most of them (like AUD)

- 20 K in rocksolid companies like Nestle or Roche or Total or utilities...

- 10K in a short instrument maybe best on emerging markets since they get hit worst when liquidity retreats.

- 10K in GDXJ (couldnt resist...:p )

What say you guys, would you leave your own grandma with such an alocation...

Cheers.
 
Maybe start a bakery?you'd have a fresh bread on a daily basis for your grandma.

:p

Wish you and you grandma good health and prosperity!
 
I wouldn't put anything in Egypt unless you expect the newly elected radical islamists to lead the country to economic prosperity
 
Not an investment adviser but it sounds like no investment other then savings/bonds/cash would be appropriate. If anything happens in stocks/etc it can take 10-20 years to work off.

If it were me.. I'm not sure what I'd do but I'd look to invest the majority of it in treasury bonds with only perhaps a small portion invested in non us treasury bonds/currencies for currency risk.

You may also want to think about estate planning. Outside my domain, as well.

Quote from Debaser82:

My grandma sold her appartment as she is in a retirement home now.

After putting away some cash for covering expenses the next years (her pension only covers 1/2 of her expenses) and cash to pay for inheritance rights (it's a reality...) she has about 100K USD coming available to invest.

I was thinking about employing it the following way. The goal is to support her day to day expenses somewhat and not lose to much of the principal but I guess everyone wants that...

- 10K in the Nikkei. (I see there are small cap Japanese indexes too?). Nikkei has been dead for 20 years, if the Yen rises we do good, if the Yen tanks stocks could compensate for it.)

- 10K in a broad emerging market index.

- 10K in a emerging market of choice (Vietnam, India, Egypt?).

- 10K in the S&P.

- 10K in a local telephone company that pays a great dividend

- 10 K in a foreign corporate bond (but what currency the Euro tanked against most of them (like AUD)

- 20 K in rocksolid companies like Nestle or Roche or Total or utilities...

- 10K in a short instrument maybe best on emerging markets since they get hit worst when liquidity retreats.

- 10K in GDXJ (couldnt resist...:p )

What say you guys, would you leave your own grandma with such an alocation...

Cheers.
More...
 
Quote from pupu:

I would put anything in Egypt unless you expect the newly elected radical islamists to lead the country to economic prosperity
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Yeah, I do think Africa is one of the true contrarian investments left but maybe Egypt is a tad out there... :p The likes of Vietnam or India also have a lot of problems so I guess to some extend it is also a liquidity play.


Quote from Lucias:

Not an investment adviser but it sounds like no investment other then savings/bonds/cash would be appropriate. If anything happens in stocks/etc it can take 10-20 years to work off.

If it were me.. I'm not sure what I'd do but I'd look to invest the majority of it in treasury bonds with only perhaps a small portion invested in non us treasury bonds/currencies for currency risk.

You may also want to think about estate planning. Outside my domain, as well.
More...

I am European so putting it all in Treasury bonds seems like a bit risky no, just for the currency risk alone, and if not I am betting the house for the USD to apreciate...

So what is the alternative? Put it all in Bunds? They are quite expensive obviously and the Euro crisis could play out in many ways.

On the matter of estate planning you pay 3% on everything below 300K USD if it is straight line family so that takes care of itself I imagine...
 
Quote from Debaser82:

My grandma sold her appartment as she is in a retirement home now.

After putting away some cash for covering expenses the next years (her pension only covers 1/2 of her expenses) and cash to pay for inheritance rights (it's a reality...) she has about 100K USD coming available to invest.

I was thinking about employing it the following way. The goal is to support her day to day expenses somewhat and not lose to much of the principal but I guess everyone wants that...

- 10K in the Nikkei. (I see there are small cap Japanese indexes too?). Nikkei has been dead for 20 years, if the Yen rises we do good, if the Yen tanks stocks could compensate for it.)

- 10K in a broad emerging market index.

- 10K in a emerging market of choice (Vietnam, India, Egypt?).

- 10K in the S&P.

- 10K in a local telephone company that pays a great dividend

- 10 K in a foreign corporate bond (but what currency the Euro tanked against most of them (like AUD)

- 20 K in rocksolid companies like Nestle or Roche or Total or utilities...

- 10K in a short instrument maybe best on emerging markets since they get hit worst when liquidity retreats.

- 10K in GDXJ (couldnt resist...:p )

What say you guys, would you leave your own grandma with such an alocation...

Cheers.
More...

Many of these assets are highly correlated. It looks like at portfolio for someone looking for risk that might have higher returns during a time of a bull market. How will she handle the months where she is down 5%? 10%? Anything more than 20% - 25% in equities sounds too risky for most people in her position.
 
Quote from rmorse:

Many of these assets are highly correlated. It looks like at portfolio for someone looking for risk that might have higher returns during a time of a bull market. How will she handle the months where she is down 5%? 10%? Anything more than 20% - 25% in equities sounds too risky for most people in her position.
More...

They are correlated but perhaps less so then people might suspect in my view.

Look at 2008 where US markets collaped 50% but emerging markets like China or Russia 70% or more.

Or look at 2011 where the US ended flat but emerging markets tanked 20% with on top the currency dropping 20% as wel.

I try to reduce risk as well by chosing primarely index investing also and through the diversification in different currencies as wel. The dividents should account for some risk hedging as well.



But anyway, thanks for the post I wil certainly take it into consideration as the large exposure to equities was clear to me to.
 
Just yakking, but I would look into some insurance products,not very sexy but too many unknown variables to lose your money regarding Grandma's future health (re assets, old age care, medical benefits etc. - at least here in the US).

If I was goin to inherit the remainder of Grandma's 100k @ some point in time and still provide her with coverage of day to day expenses probably I would look into some type of paid up whole life insurance.

Secondly, although annuities are notorious for poor returns, I still would investigate an immediate annuiity to provide a monthly check with survivors benefits.

(split up, maybe 50k 50k)

The goal would be to make Grandma's 100k untouchable by the powers that be, in the event of catostropihic health expenses.

I don't know for sure but if you purchased a paid up whole life policy, you could probably borrow against it and take the proceeds and invest in the market.

Also you could take the monthly check from the annuity and add to an investment account. So all is not lost with liquidity for future investments, but Grandma's money would be almost untouchable.
 
In your view? How about figuring out the correlations instead of guessing? You can start by doing a portfolio xray in Morningstar. It isn't perfect but better than guessing and you can improve on it with a little effort. Also, I'd put more in bonds and unless you know more about them than someone like Gundlach, put that part in a few good bond funds.
Quote from Debaser82:

They are correlated but perhaps less so then people might suspect in my view.
More...
 
Quote from nutmeg:

Just yakking, but I would look into some insurance products,not very sexy but too many unknown variables to lose your money regarding Grandma's future health (re assets, old age care, medical benefits etc. - at least here in the US).

If I was goin to inherit the remainder of Grandma's 100k @ some point in time and still provide her with coverage of day to day expenses probably I would look into some type of paid up whole life insurance.

Secondly, although annuities are notorious for poor returns, I still would investigate an immediate annuiity to provide a monthly check with survivors benefits.

(split up, maybe 50k 50k)

The goal would be to make Grandma's 100k untouchable by the powers that be, in the event of catostropihic health expenses.

I don't know for sure but if you purchased a paid up whole life policy, you could probably borrow against it and take the proceeds and invest in the market.

Also you could take the monthly check from the annuity and add to an investment account. So all is not lost with liquidity for future investments, but Grandma's money would be almost untouchable.
More...

The most popular insurance products here are 100% guaranteed by the government (it's not like there is no risk there right) and are looking at a 1.3% return in 2012 because they say the world is very unstable and they don't want to gamble with their clients money.

I'd might come of cocky or ignorant but that return is just too little really and I don't feel one would have to settle for that.

I must add the catastrophical health expenses isnt really an issue, she just spend 1 month in the hospital and the bill was 2000 USD so that's overseeable right...

The biggest unkown is how long she will live, she is 86 and could live another 10 years or could die next week so I take it it would be wise to find a middle ground in the aproach.

The inheritance issue is also there since my mother will be the only beneficiary and I would like for here to inherit a long term portfolio that will need only modest changes should she become owner of it.

So there are many angles to it you see...:D
 
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