Helping older investors – I mean those in the 80s, and even in the 70s is a little tricky. Obviously, they have been investing for about 30-40-50 years, and obviously know what they are doing. Wait a minute – do they really know what they are doing?

Ken Fisher talks about his father’s worst mistakes happening after his age of 70. Dev Anand slipped as a film maker post 70 years of age. My take is simple. By the time you are 70 if you do not have a younger person willing to do a quarterly, unbiased review of your portfolio, you should do the following things:

  • shift to an index fund for about 80% of your equity exposure (growth option)
  • be invested in a dynamic bond fund (sadly we do not have a bond index fund)
  • have bank fixed deposits for about 2 years expenses (it is pretty inefficient to seek too much liquidity)
  • have 5 years expenses in a liquid fund
  • continue to do SIPs if you have a very big pension
  • Buy yourself an annuity once more – assuming that you do not have an indexed pension

Studies confirm what most of us have seen among our families and friends, even if we’ll never admit it about ourselves. The ability to make effective decisions declines with age. Thus those age 60 and up unnecessarily lose nearly $3 billion to fraud annually. To put it starkly, the research shows that financial literacy declines by about 2% each year roughly after age 60.

This is of course from an American study quoted by Bob Seawright in one of his articles.  As cognitive impairment increases, the aging remain certain that they’re really OK and become belligerent when anyone suggests otherwise. We all like to think we’re highly competent and desperately want to maintain our independence. Trying gently to let aging loved ones know that they need help can readily turn into an ugly confrontation. It is very difficult to hold a mirror to any face. 

Treat this article as an article to be read aloud and send a copy to your kids so that they show it to you when YOU refuse to take help from the kids in your house. It is stupid to be adamant and arrogant. Yes you were very good and competent in your younger age, and these kids who are offering help are the ones that make you proud day in and day out. They are the kids to whom the world is turning for help, why don’t you?

Is it that you do not want them to know your wealth? That is worse.

Is it that you do not see yourself slipping? Google and read the research work of David Dunning and Justin Kruger – in the American context. The Indian context cannot be very different, right?

If you are in your 50s, it is a good time to start. Look for a 30 year old whom you trust – professionally, physically, and emotionally. This is very important if your kids are not going to be in the investment / financial advisory business. Could be a friends kid or some kid whom you have liked professionally.

If you are in your 60s, you should be implementing this, along with the logic of what you are doing JOINTLY with your reluctant spouse, and start giving instructions in writing, and keeping copies of the same. Create your Investment Philosophy Statement and an Investment diary explaining the rationale of your portfolio – of whatever it is.

In your 70s supervise your spouse’s interaction with this person. Tell your spouse to ASSUME you are dead. So just observe what your spouse is doing. You can react 24 hours later. Involve the kids of the house. Assuming all the people in your house are equally well off you need not worry about envy, jealousy…etc. If you are worried seek outside help. For heavens sake do not ASSUME THAT YOUR KIDS will be interested, find time or be competent to handle personal finance. I know parents ‘hoping’ that their son in the USA will look after their mutual fund, equity, …portfolio in India.

All the best.

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  1. In case you do not have any reliable kid who has financial knowledge and your own son/daughter not only capable of taking care of your portfolio, what should one do?

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