Investing a lump sum after sale of the family home
Q: My mother is 88 and recently moved into a retirement/assisted living community. She uses her Social Security, pension, and about $1,000 a month from an $80,000 Vanguard money-market account to cover monthly expenses. She is about to sell her house. It will likely sell for just under $300,000. What is the best thing to do with that money?
J.L., via e-mail
A : "Let's conservatively say that your mother will be in the assisted-living complex for another 20 years," says Ginita Wall, a financial planner in San Diego and cofounder of the Women's Institute for Financial Education (www.wife.org). In this scenario, she would need 240 months (12 months times 20 years) of $1,000 each.
If the house sells for $300,000, put half of the money into an intermediate-term bond fund, Ms Wall says. Use that and the $80,000 Vanguard account (which will gather interest along the way) to cover her living expenses.
She suggests investing the other $150,000 in index funds for her heirs. "Even if the money only grew at 7 percent a year, it would more than double in 20 years," Wall says.
Q: I sent a check for about $7,000 to my church about a year ago and it bounced. I initially received this cashier's check from my bank in 1991 after closing out an IRA account. I lost the check for a number of years, but found it last year and wanted to make the donation. I have been told by the bank that took over my original bank years ago that it can't trace the money. What do I do?
Name withheld, Boston
A: "Check to see if the original bank might have turned the account over to the unclaimed assets department of your state," says Gary Schatsky, an attorney and fee-only financial planner in New York. "File a claim with that department."
Massachusetts law mandates that financial property that remains inactive for three years be turned over to the State Treasurer's office. So the account would likely have been turned over to the state as abandoned property in 1994.
Incidentally, someone at your church's gift-services division has contacted the Massachusetts Treasurer's Department, which has asked that you fill out a claim form. Perhaps the assets can be retrieved.