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Written by Chuck Bowen
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Saturday, 28 February 2009 19:00 |
"My sister (44) has a limiting disability which qualifies her for social security monthly payments for support. She lives a very modest life due to her income limitations, but does make it with her income. She has no debt, pays her rent and buys her groceries. I can't say what she does with the remaining. Recently we sold our deceased mother's land and I received her portion of the disbursement. I would like to find a savings vehicle that would generate some interest for her. The amount is less than $8,000.00 and in my research I notice that for many accounts where a respectable amount of interest is available, the minimum balance is $10,000."
~ Jan
Jan,
I appreciate your caring and attention to your sister's needs. Today, it's increasingly difficult to find folks truly interested in what's best for others (including their family). Let me see how I can help.
First, help her establish a very basic budget: Food, Clothing, Rent, Transportation, Utilities, Giving. Then, give the remaining income dollars names (Entertainment, Cable, Personal discretionary spending, etc).
Next, to the best of your ability, determine how much she'll need over the next five years or so for upcoming foreseen expenses (perhaps $2000).
That amount should go into a money market savings account (consider this her emergency fund) at a local bank (should be able to get around 5% interest on your deposit).
The remaining dollars should be invested in a good growth stock mutual fund (Ex. Vanguard 500 index fund) for future needs. If you earn an average 10% return, the money will double every seven years or so. The important thing here is to let them money work for her, and don't dip into it unless there's a crisis. |
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