| Home sale proceeds needed for retirement |
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markg
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Joined: 19 Nov 2003
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| Home sale proceeds needed for retirement |
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My mother-in-law is 72 and a recent widow. Due to health problems and limited mobility she had to move to an assisted living apartment in Texas. She had to sell her home, from which she cleared $191,000. She also has $20,000 in a checking account. That's all the money she has.
She receives social security and a small pension. We estimate that she needs $1,000 per month to supplement her fixed income in order to make ends meet.
The aforementioned $211,000 is temporarily sitting in a checking account with 4% interest rate. Given that she needs to draw off or receive $1,000 per month until the money runs out, where should she put this money?
(Her children will take care of her when the money runs out.)
Thanks
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Wed Nov 19, 2003 9:19 pm |
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bbrc554
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| Home sale proceeds needed for retirement |
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Wow! Where do you bank? 4% interest rate for a checking. I would like to do business with your bank.
Anyway, there is no any short term investment can generate 4% rate of return at this time. So you can't beat that.
You can try 10 years bond but I don't think they can beat 4% with that kind of liquidity. Currently money market generate 0.75%-1%.
So keep your 4%.
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Wed Nov 19, 2003 10:06 pm |
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markg
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| Wrong rate |
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I thought 4% was high. I asked her son and he gave me the correct figure 0.4%. A huge difference. This is indicative of my mother-in-laws ability to handle her financial affairs - not good.
So, given that the money isn't doing anything in the checking account, and that she needs to draw $1,000 per month from it, what is a good strategy for her? Thanks.
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Fri Nov 21, 2003 1:25 am |
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Andrew
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5 Year CDs are getting close to 3.5% according to BankRate.com. A big portion of the principle could be invested in long term CDs, earning a better rate than that checking account, and would be a very safe investment. By investing in different length CDs, you can have money becoming available more frequently in case it is needed. No matter what you invest in to maximize the money, just make sure that there are always plenty of liquid funds for expected and unexpected expenses.
http://www.bankrate.com/brm/graphs/graph_trend.asp?product=11&prodtype=D&ad=dep
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Fri Nov 21, 2003 5:10 am |
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