Q: Dad will be 100 years old next month. He is in poor health and suffers from dementia as well. He is not likely to live more than a year or two. He is selling his home and will net $240,000. It's his only asset.
His monthly income is $3,000. His nursing home expenses are $9,800 per month.
I would appreciate advice on where it is best to place the proceeds in order to earn reasonable, yet safe, interest on his money.
A: There are two ways to view this. First, you can invest the money in CDs and the like, on the basis that the money must be invested with utmost safety and liquidity to meet your father's income needs. The CDs won't generate very much in profit, but that's a price you pay for safety and liquidity.
If you do this, you'll earn perhaps 5 percent per year. That's about $1,000 per month (ignoring taxes), meaning he'll have a total income of $4,000 per month. That leaves him $6,000 short. Each month's shortfall means he earns less interest the following month. It's a downward spiral, but his money will last about three years. Thus, it's likely that his money will outlive him.
Since he's not at risk of going broke, you might consider a different way to view the situation. Because it's reasonable to assume that there will be an inheritance for you and your siblings, you could consider Dad's money to be yours; he's merely the caretaker of the money for now.
In other words, it might make more sense to invest the money with you (and his other heirs) in mind. This means we'd invest the money in a more diversified portfolio -- one that could generate the income needed to pay his nursing home bills but one that also has the potential to grow in value -- something a bank CD cannot be expected to do.
I would recommend the latter. It would meet everyone's needs -- your father's as well as his heirs'.
Q: My girlfriend and I purchased a house three years ago. Since my credit score was low (580) and hers was high (750), the house was placed in her name. We received an "interest only" loan for the first five years. My score has since improved (650), and we would now like to refinance at a better fixed rate. My girlfriend also wants my name on the mortgage, and I will be a "first-time buyer." Our combined income is a little over $200,000, and my share is $115,000. Any suggestions?
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