Investment advice for elderly - approx £300k

talexuser

I am POA fpr my Mum, who is in a care home, also virtually cost neutral. Her savings are in a joint account I access as POA. I have kept her ISA going since the monthly dividends cover half her costs, and the savings are enough to cover the nominal shortfall in costs for another 194 years according to my latest spreadsheet (Mum is now 86). Since I have organised her ISA for the past 25+ years I saw no reason to change that, and there are plenty of savings to cover any dividend fall due to a market crash. I also have assets which could be used in such a shortfall emergency, though that possibility would be remote.

Jumping everything into funds for someone who has not had them before when a crash could reduce capital by 40% tomorrow might not be seen as best practice for a POA?

If you have 300k in savings, that is surely enough to cover any increases in care home fees for many years to come. Therefore I would seek the safest high interest route available for an amount you calculate is necessary for increases for the next decade say. Any left over could be invested on the reasonable basis that any crash would be corrected before the capital was needed rather than the income. There might be a good chance the remaining income is enough to cover your increases in fees, but a safety route is fulfilling your obligations as POA.

albert100

Interesting debate - thanks for all comments.

Yes know about the POA commitments, hence the caution here.

We probably need to model her financial needs from the £300k - zero right now, a bit next year, a bit more the year after, etc. But of course all a bit guesswork as we don't know how the pension will rise (yes, always by less than 5% pa, but how much less?)

The £300k is residue from house sale. So she was not an investor before, unless buying a family home many years ago counts as an investment, in the meaning of the word here!

She doesn't have the capacity to make any decisions in this area now, sadly.

We will be taking formal and indeed documented advice but I wanted to be pre-prepared, as it were.

More thoughts welcome

Albert

HappyHarry

Jumping everything into funds for someone who has not had them before when a crash could reduce capital by 40% tomorrow might not be seen as best practice for a POA?

Lower risk investments may well be more appropriate.

It doesn't matter what the donor had done before. It is acting in the donor's best interest that is important.

e.g. If a donor had stored £500,000 in £50 notes in a cardboard box under their bed for 20 years, then that was their decision. However, if a POA continued storing £500,000 in £50 notes in a cardboard box under a bed, then that would be considered not be in the best interests of the donor irrespective of it being what the donor previously did.

Linton

If a donor has more than enough safely held cash to meet any reasonable need is taking an action to invest "spare" money with a resultant risk to capital acting in their best interests if it wont affect their quality of life either way? ie does any action need to be explicitly justifiable by a provable "best interest" criterion or is a no harm criterion sufficient?

Notfarfromtheborder

Was in a similar position with my Father, albeit he was not cost neutral, and had a shortfall in income v expenditure when going into care.


His income was pension / annuity / dividends from a portfolio under DFM. Any shortfall was made up from disposal of equities.


After the sale of his house, and an inheritance he received changed matters as income v expenditure virtually balanced out (as poa I put these extra funds with DFM)


DFM then listened to what he needed to receive by way of dividends / disposal whilst using relevant tax allowances.


In essence I handed over the minor detail of what investments were held to someone else, whilst knowing they were instructed to achieve an end result following me completing a risk questionnaire on his behalf .


Good luck, what ever you decide

xylophone

Even if the OP chooses to stay wholly in cash there is no reason to accept an interest rate as low as 0.8%.

Admittedly opening accounts as PoA is a very often a hassle as a relative who has PoA for my acquaintance has found.

http://www.thisismoney.co.uk/money/article-1583859/Best-savings-rates-General-savings-Internet-branch.html

The 94 year old in question already had db and state pension income and substantial investments as well as cash ISAs etc when she entered care - the proceeds of sale of the family home were also substantial and as I understand it, as well as cash deposits ( including NS&I accounts) the PoA administers stocks and shares ISAs and trading accounts.