My sister-in-law came over Thursday to go over my father-in-laws investments and what to do with them.  He’s still all worried about what to do with the money after his house sells. 

After going through her ideas and mine, we’ve come to what we feel is a decent and safe investment strategy that will earn him about $983 a month in income from the investments.  Here’s the breakdown of what we decided:

1. Put 40% of their $200,000 into REIT’s.  This will include 3 different ones with approximately $26.6K in each.  That way if one REIT goes under at least the other two should stay afloat long enough for us to decide the REIT’s status.
2. Put another 40% into index funds.  The right index funds can produce solid returns of about 4-5% per year with distributions paid monthly.  One will most likely be the Canadian Bond Index, which has a 5 year average return of 4.5%.  A mutual fund that also looks promising is the TD Monthly Income fund.  I’m wary of the fluctuating unit prices but that could be a bonus if her parents buy in at the right time.
3. The last 20% of their retirement money will be put into Guaranteed investments such as a 3-year GIC earning 2.5-3.0%.  It’s not the greatest return but at least it’s completely secure.

So if you do the math … you get $80000 earning about 9% a year (or $7200 a year income), $80000 producing $3600 a year @ 4.5% and $40000 earning $1000 a year for a grand total of $11800 a year worth of income.  Not a huuuge amount but hey, it pays for rent.

There you have it … their parents are coming down on the first weekend in February to discuss their options and also to meet with a financial planner from RBC.  We’ll see what they say about both ideas and cross our fingers they choose the best option.