Investing for an Elderly Relative September 18, 1996January 30, 2017 From Syd at Auburn University: “We apply your four-prong technique to our investing, and it has been very rewarding. We also invest for my wife’s foster mother who is 96 years of age. She has always been a very conservative investor, primarily in CD’s and treasury notes. We have broadened her portfolio to include a few mutual funds which include the Janus Fund and Mutual Qualified. We’ve kept most of her money during the past two years in the CD’s and treasury notes, and we plan to substantially add more mutual funds when the market corrects. Since we have had a long period without a significant correction, and one will come at some point, that strategy is not adding as much income as we would like. Would you suggest dollar cost averaging at this point? Her net worth is about $500,000.” The four prongs Syd refers to are, basically, liquid money (like cash or a money market account); an inflation hedge (like your house, or someone else’s house if you can afford it); a deflation hedge (like 30-year Treasury bonds); and a prosperity hedge (stocks). There’s more to it than this, but the real art — which I don’t claim to possess in more than common-sense measure — would be in knowing how to deploy your assets among those four prongs. That depends in large measure on your own financial situation. Anyway, it sounds as if you’ve got almost all your foster-mother-in-law’s dough on a single prong, and the least exciting one at that: liquid money. How is this woman expected to live another 20 or 30 years if you don’t give her something to dream about? Buy her a few Netscape Shares! Some Lucent Technology! Ask her how she’d like to own some UUnet! Just kidding. But I do think you could put at least half the $500,000 in the Lindner Dividend Fund, conservatively but brilliantly managed by Eric Ryback. You can buy it directly (call 314-727-5305) or via several discount brokers. It’s grown at 17% a year for the last two decades, and typically goes up, at least a little, even in years when the market IS correcting. There are no guarantees, of course. But check out this fund and I think you’ll feel pretty good about it.