Share/fund portfolio is better than cash ?

[soyabean]

Hi,
I am posting this question here as this is a property forum.
Hope some investors here with relevant experience will give their opinion.

I have a relative late 40, single, wage is about 40K. He has just been inherited I think about 400K and he does not know what to do with it other than bank it.

He has a slight mental health issue so asking him to go learn about property or share so he can be an informed investor is not quite an option.

Is there such a thhing as a "care-free" share or fund portfolio, or any creative ways he could invest his 400K in for a better overall return (some income and keep with inflation) than keeping it as cash in bank ?

Thanks in advance for all inputs.

 

[Fifth]

If his mental health is such that he's not up to researching shares and making his own informed decisions, I think he's better keeping it as cash in the bank than investing it in a managed fund. There are no carefree options when it comes to managed funds. Even the most low risk options tanked badly during the GFC and there's no guaranteeing it won't happen again.

Perhaps others will have more helpful advice.

 

[Sunfish]

That's a hard one. If he is earning and staying out of financial trouble, he is clearly "competent" at law.

Being so, he can sign an Enduring Power of Attorney or Trust Deeds. Apart from yourself, are there a couple of others who can either run a trust [unleveraged] for him or do due diligence finding a professional trustee to invest this money.

Just leaving it in a "spending" account at a bank is fraught with danger.

ps. The professional trustee would be most dignified for the rellie, and he is entitled to that.

 

[hobo-jo]

I think he's better keeping it as cash in the bank than investing it in a managed fund.

+1

Given that the government guarantee on deposits is $250k per customer per institution he should also consider splitting the deposit over at least 2 ADIs.

 

[Rolf Latham]

Go and see a planner

There are some capital protected products that may help.

Middle term, cash after taxes will leave little left over after inflation.

Work out what the real risk profile and it may be that the risk of being inactive may be higher than actively managing the investment

Ta

Rolf

 

[willair]

He has a slight mental health issue so asking him to go learn about property or share so he can be an informed investor is not quite an option.



Thanks in advance for all inputs.

http://www.pt.qld.gov.au/enduring-power-of-attorney/

 

[Terry_w]

http://www.pt.qld.gov.au/enduring-power-of-attorney/

If he has mental health issues he may not be able to appoint an attorney.

 

[Sunfish]

If he has mental health issues he may not be able to appoint an attorney.

If there is no reasonable prospect that the state could appoint a guardian, the corollary is that he is competent. As there is zero chance that the state would appoint a guardian for this gentleman, as described, his competence is not in question.

His dignity should be respected, that is why I suggest a third party, professional trustee.

 

[Terry_w]

A professional trustee is going to cost a fortune and there will be loss of control.

If he has capacity then he has the right to manage his own affairs and decide where to put his money.

 

[Sunfish]

If he has capacity then he has the right to manage his own affairs and decide where to put his money.

That's what I'm saying, thank you. He has the legal capacity to control his own affairs until/unless someone challenges that right. So if he thinks controlling the investment is beyond him, which is how I read the OP, he has the right [not obligation] to ask for help from a trustee.

What do you suggest?

I have a daughter in a somewhat similar position and I would NEVER give her a lump sum. I think it would be good if he voluntarily ceded some control so there was wise oversight. The world is full of leaches.

 

[Terry_w]

Most of the people I know don't have the ability to manage their money.

Unless he has capacity issues then I think it should be up to him how he invests it.

 

[Sunfish]

Most of the people I know don't have the ability to manage their money.

Unless he has capacity issues then I think it should be up to him how he invests it.

Leave him to the wolves and vultures: Not your problem. Do you suggest I do the same with my daughter?

 

[Terry_w]

Leave him to the wolves and vultures: Not your problem. Do you suggest I do the same with my daughter?

I think someone should take care of you

 

[soyabean]

Thank you for all the comments so far.

I would like to clarify that he is capable of handling his affairs in a general sense but does not have the capacity to self learn and become "an investor" to better invest his 400K other than banking it. Don't have to worry about him spending it in the Casino, new car or big plasma etc, he won't.

If do nothing else it will just sit in the bank. So my question is more about investment options rather than the legal aspect.

All I could think of is may be he could buy the type of bond that is linked to inflation, may be this is better than cash at least his capital base does not inflate to next to nothing down the track ?

May be I should rephrase the questions as: If you had 400K and want to invest it the most passive way how would you do it other than as cash in bank ?

I know that for tax advice we should see an accountant and for fin advice we should see a fin advisor etc. However inputs and comments here are very valuable, they add to our knowledge pool and/or help prompting for more research (in this case I research and explain to him) so that a least he may come to see these professionals, if he decides to do so, with some knowledge not zip.

Thanks again I appreciate all the comments please keep them coming.

 

[hysterical]

May be I should rephrase the questions as: If you had 400K and want to invest it the most passive way how would you do it other than as cash in bank ?

Thanks again I appreciate all the comments please keep them coming.

invest in government bond or government bond fund

Cheers

 

[jingo]

Is there such a thhing as a "care-free" share or fund portfolio, or any creative ways he could invest his 400K in for a better overall return (some income and keep with inflation) than keeping it as cash in bank ?

Thanks in advance for all inputs.

A Vangard index fund may be appropriate. They have a range to choose from including a High Growth Fund which has a mix of Australian and International Shares as well as some exposure to property.

Failing that, $400,000 would almost be enough to buy an Ip with perhaps a very small loan that would be covered by the rent. Perhaps your friend would be able to have some help managing this?

To be honest, I'd stay clear of a financial advisor. If disability pensions etc are involved, I hear that you can obtain financial advise for free from centre link.

Regards Jason.

 

[willair]

If he has mental health issues he may not be able to appoint an attorney.

Sometimes is blindingly obvious but they are the only safe place i could think of...either way someone will test their patience too cascade into
something like this,unless someone like you Terry with your prior expereince may help,because this area in the 4 million plus
"BB" that will retire over the next few years a lot will-0r aleady have mental health issues..imho..

 

[Intrinsic_Value]

Hi,

Is there such a thhing as a "care-free" share or fund portfolio, or any creative ways he could invest his 400K in for a better overall return (some income and keep with inflation) than keeping it as cash in bank ?

.

If your view point is less than 10 years in the current australian stockmarket, the answer is no.

If 10 years or longer, i would suggest a 50/50 mix of industrial shares (which include banks, but no resources) and broad based australian shares (which include resources). If you are asking this question in the first place, then i would suggest an index based fund based on the 50/50 mix rather than active fund managers or a do it yourself direct share portfolio.