No. of Recommendations: 6
So the question is what should a nonagenarian, whose main goal is preservation of capital, be invested in?
This is not the only question for a 90 year old. See below.
Roughly half her portfolio is in a traditional IRA, where capital gains aren't a factor.
Hmmm, immediate capital gains are not a factor, so anything within that account can be traded at will. However the IRA after death doesn't benefit from a step up in basis and whoever inherits it will take distributions over 10 years (I think, or maybe lifetime?) and pay taxes on those distributions.
If it were my portfolio I might have the IRA in TIPS.
This is indeed an option.
BUT, beware, do NOT sell the stuff in the taxable account and incur needless capital gains taxes. I had a distant relative, that at age 92 "changed brokers" and the new broker sold everything and incurred capital gains of several million, and then reinvested all the money in load funds where he received quite hefty fees ("kickbacks"). At the time, early 80s, the capital gains tax rate was 28%, so a huge tax bill was incurred. Add to that, the front-end loads of 5+%, and a lot of that money evaporated needlessly. Since I wasn't an heir, it didn't affect me at all, but she died less than a year after those transactions, and whoever inherited ended up receiving a lot less.
Perhaps the best thing to do is to convert part of the IRA to a Roth IRA each year to use up the lower brackets if possible.
