Hey all.
My mom inherited some funds from her mom in 2007. Since then she's held them. The funds are DIFAX, MHITX, and WRHIX. I had a look at what is in the funds. DIFAX seems the best because it has some equities (28%) and investment grade debt (1%), but it holds some junk bonds (23%) and also has about 13% mortgage backed securities. MHITX is very concerning, as it is 91% corporate junk bonds. WRHIX is the most astounding with a whopping 95% in bonds rated BB or lower.
I explained the risks of these junk bonds to her, and that she holds too much junk for her age (mid 70s), but she said she needs the income. She is on Social Security.
I recommended instead of junk bonds to put 25% in utilities, 25% in dividend stocks, 10% in healthcare fund, 10% in a REIT, 5% in gold, and then if she's intent on income to keep only 25% in junk bonds if she needs the income from those. At least with that she has 75% in good assets. Right now she has around 90% in awful assets. She likes the monthly payout from these junk bond funds. So I suggested staggering the other funds (the ones I suggested) where maybe one pays out in January, one pays out in Feb, etc. I'm not sure if that's possible, or if they all pay out quarterly, but it was an idea to keep her getting monthly income instead of waiting for larger quarterly payments.
Am I overreacting? I think these junk bonds could easily go to $0, especially with Corona-virus wiping out many of the already struggling corporations in these funds. I also think this is way too much junk/risk for someone in their 70s to own.
Thanks.
Submitted April 30, 2020 at 11:19PM by sureruchat https://ift.tt/2VWfiu5
