How to invest a bunch of cash?

[Anonymous]

I manage the money for my parent and they have a bunch of cash they will not need in the next five years. I have put some into a bank savings account. More will come. Once I have all the money together, I want to set up a smart place to put a percentage of it.

The money is in a trust, so I have to keep that in mind if/when setting up any new accounts.

We do have a financial advisor, but I can't place the money with them because those accounts are not in the trust. After doing research on the topic, I'm not sure it's wise to put beneficiary-guided accounts into a trust after doing research on the topic.

I worry that money markets and CDs may not keep up with inflation.

Is the best course of action to research CDs and money markets to see what offers the most return?

[Anonymous]

Does your parent have an investment portfolio? If so, given that the money has no earmarked purpose in the near-term, why not just invest the money according to how the rest of the portfolio is invested? For example, if you parent's portfolio is 60/40 stocks/bonds, just invest the money the same way. It is all one big pot of money. If there is separate money available with no specific use, it really doesn't make sense to treat it differently.

[Anonymous]

Anonymous wrote:Does your parent have an investment portfolio? If so, given that the money has no earmarked purpose in the near-term, why not just invest the money according to how the rest of the portfolio is invested? For example, if you parent's portfolio is 60/40 stocks/bonds, just invest the money the same way. It is all one big pot of money. If there is separate money available with no specific use, it really doesn't make sense to treat it differently.

They do. In bullet 3, I mentioned that I can't put it into the brokerage account because it's not in the trust. I also can't make changes to that account on my own and have to go through a financial advisor. Very odd to me since I do Vanguard on my own.

I was considering opening a new account at Vanguard that would be opened in the trust's name. A lawyer told me the money needs to stay as "trust money."

OP

[Anonymous]

Anonymous wrote:

Anonymous wrote:Does your parent have an investment portfolio? If so, given that the money has no earmarked purpose in the near-term, why not just invest the money according to how the rest of the portfolio is invested? For example, if you parent's portfolio is 60/40 stocks/bonds, just invest the money the same way. It is all one big pot of money. If there is separate money available with no specific use, it really doesn't make sense to treat it differently.

They do. In bullet 3, I mentioned that I can't put it into the brokerage account because it's not in the trust. I also can't make changes to that account on my own and have to go through a financial advisor. Very odd to me since I do Vanguard on my own.

I was considering opening a new account at Vanguard that would be opened in the trust's name. A lawyer told me the money needs to stay as "trust money."

OP

Why and how are you getting the money in fits and starts if it's in a trust? I assume you have to wait for your parent to pass away....

[Anonymous]

How old is your parent? I feel that the older they are, the more accessible I’d want that money for them. Also would prefer it to be conservative.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Does your parent have an investment portfolio? If so, given that the money has no earmarked purpose in the near-term, why not just invest the money according to how the rest of the portfolio is invested? For example, if you parent's portfolio is 60/40 stocks/bonds, just invest the money the same way. It is all one big pot of money. If there is separate money available with no specific use, it really doesn't make sense to treat it differently.

They do. In bullet 3, I mentioned that I can't put it into the brokerage account because it's not in the trust. I also can't make changes to that account on my own and have to go through a financial advisor. Very odd to me since I do Vanguard on my own.

I was considering opening a new account at Vanguard that would be opened in the trust's name. A lawyer told me the money needs to stay as "trust money."

OP

This is not making sense. If it’s not in the trust why is some lawyer telling you it needs to stay at “trust money”. Need a lot more info. Do you have Power of Attorney? Trusts in so many cases over complicate things and are not necessary in many situations but as always it depends (but don’t tell the lawyers on this board that).

[Anonymous]

You can always open a new Vanguard account.
You can buy Treasuries at auction and hold to maturity with no risk. You can also get bank issued CDs. These are buy/sell transactions on the dashboard.

[Anonymous]

Trusts can be very complicated. My husband and I have set up irrevocable generation skipping trusts but we have investment accounts set up a 2-3 firms such as Fidelity with those investment titled under the trust names and dates. It's easy if you are the trustee of a trust. If a bank is the trustee of the trust that can make things very complicated if the trust'a goal is to be income producing which limits your options. My mother was the beneficiary of a trust where the trustee was a bank that ended up being sold a bunch of times and it was impossible to make any changes until we got a lawyer involved who had to prove to the state that the trust wasn't being well managed.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Does your parent have an investment portfolio? If so, given that the money has no earmarked purpose in the near-term, why not just invest the money according to how the rest of the portfolio is invested? For example, if you parent's portfolio is 60/40 stocks/bonds, just invest the money the same way. It is all one big pot of money. If there is separate money available with no specific use, it really doesn't make sense to treat it differently.

They do. In bullet 3, I mentioned that I can't put it into the brokerage account because it's not in the trust. I also can't make changes to that account on my own and have to go through a financial advisor. Very odd to me since I do Vanguard on my own.

I was considering opening a new account at Vanguard that would be opened in the trust's name. A lawyer told me the money needs to stay as "trust money."

OP

Why and how are you getting the money in fits and starts if it's in a trust? I assume you have to wait for your parent to pass away....

I am not getting the money. I am managing a situation in which my parent is getting money, and I manage their affairs.

[Anonymous]

Anonymous wrote:Trusts can be very complicated. My husband and I have set up irrevocable generation skipping trusts but we have investment accounts set up a 2-3 firms such as Fidelity with those investment titled under the trust names and dates. It's easy if you are the trustee of a trust. If a bank is the trustee of the trust that can make things very complicated if the trust'a goal is to be income producing which limits your options. My mother was the beneficiary of a trust where the trustee was a bank that ended up being sold a bunch of times and it was impossible to make any changes until we got a lawyer involved who had to prove to the state that the trust wasn't being well managed.

You are right trusts are complicated. That is fantastic you can have the account set up under the trust name. Does that mean your accounts do not include retirement accounts? Titling an IRA as a trust can be a bad move as per my reading on the topic, and making the trust a beneficiary of an IRA can also be a problem.

OP

[Anonymous]

Anonymous wrote:You can always open a new Vanguard account.
You can buy Treasuries at auction and hold to maturity with no risk. You can also get bank issued CDs. These are buy/sell transactions on the dashboard.

Okay. Thank you. I'll probably do a combination of these things.

Complicating matters further, the amount in the bank account will exceed $250,000 so the additional money will not be FDIC insured. More reason to move some of it elsewhere.