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Question: My 84 year old mother has a stock broker that still has her investing in individual stocks...is this wise?

(Posted by: on 2010-09-03 08:28:35)

My 84 year old mother has a stock broker that still has her investing in individual stocks...is this a wise investment strategy for a person of this age? Why or why not?

Posted by: InspectorBudget on 2010-09-03, 08:39:12

Absolutely not. The broker should sit down with her, or you & your siblings, and figure out what your goals and objectives are. In any case, for an individual of that age, most of the investments should be in fixed income, but if some of the money is targeted for heirs, then it would make more sense to have them in more growth-oriented vehicles.

Posted by: Rick B on 2010-09-03, 08:32:14

I don't think it is EVER wise to invest in individual stocks. You can't possibly diversify. Instead, investing in quality mutual funds or ETFs makes much more sense. If I were managing the money of an 84 year old, I would put enough in dull boring safe stuff to generate the income needed, and invest the rest in stock funds (domestic and international) to create some growth.

Posted by: Judy on 2010-09-03, 08:55:46

If she has a huge amount of money, and only a small % of it in individual stocks, might be reasonable. Other than that, sounds like he or she is much more interested in churning for their own commissions than in your mother's finances. Talk to a couple other brokers, and get her to change.

Posted by: wg0z on 2010-09-03, 09:55:23

Perhaps not, but more info needed. if this is just dividend re-investment where there is no commission for the broker, it MIGHT be reasonable. figure out the commissions/ mgt fees paid as a percentage of the total value of the portfolio, then make a decision.

Posted by: Samantha E on 2010-09-03, 10:01:50

It doesn't matter how old someone is....it depends on her investment objectives. Typically as people get older, they want to make sure they have enough money to take care of themselves so they are less concerned with growing thier investments and more concerned with protecting what they have. Individual stocks are more risky then say bonds, or CDs. If indivdual stocks are traded often they can also create higher fees then a mutual fund that holds many stocks. The only way that it makes sense is if she has plenty of money to live off and the investments are going to be passed on to others.. If the funds are not expected to be needed anytime soon then it could make sense to have them in riskier investments, but that would really be for her benefiaries benefit, not hers.

Posted by: exactduke on 2010-09-03, 11:36:49

Is that because the broker wants her in stocks, or is this your mother's decision?? Brokers simply buy, sell, or invest the money as your mother directs them. A financial adviser would provide advice on investments, and what is appropriate for your mother. Is this person simply a broker. Or are they a financial adviser. There's a big difference here.