# Anyone up for this challenge?



## marina628 (Dec 14, 2010)

My friend's mom just turned 62 ,she works full time earning about $45,000 a year and has no savings to speak of.My friend has been charging her mom Doris $800 a month for rent and because her mom is so bad with money she wants to take this $800 a month aside and save for her mom for when she can't work full time. Considering this will be a short term investment and probably only for 2-3 years what is best way to go with this.


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## kcowan (Jul 1, 2010)

I would open a TFSA in her mom's name and put all the payments there. In 2011 she would have $15000 of deposit room. Next year investigate whether an RRSP could be opened in her name so that any excess might gain her some tax savings. The tax savings should be deposited in the RRSP. The deposit rate is about $10k every 12.5 months so the extra $5000 next year will get her into mid-2012 and the RRSP could absorb the difference until 2013 when another $5000 kicks in.


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## Karen (Jul 24, 2010)

kcowan said:


> I would open a TFSA in her mom's name and put all the payments there. In 2011 she would have $15000 of deposit room. Next year investigate whether an RRSP could be opened in her name so that any excess might gain her some tax savings. The tax savings should be deposited in the RRSP. The deposit rate is about $10k every 12.5 months so the extra $5000 next year will get her into mid-2012 and the RRSP could absorb the difference until 2013 when another $5000 kicks in.


It sounds as though the mother will be in a very low income bracket after she retires. Isn't an RRSP a bad idea for someone in that situation because of its effect on her eligibility for Guaranteed Income Supplement?


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## marina628 (Dec 14, 2010)

My friend can only afford $800 a month for about three years to save for her mom and definitely want it so her MOM CAN'T SPEND IT.So she is going to keep it in her name but just wanting to know the best way to do it.We think her mom is healthy enough to work an extra 5-7 years.So assume her mom will need some income from this in 2018-2020.Her mom is one of these who if you gave $50,000 to in a year it will be all gone in junk ,clothes useless stuff.She has been this way all her life so won't change now.


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## MoneyGal (Apr 24, 2009)

I'm not totally sure I understand the situation but the simplest way for your friend (I'll call her Sally) is to act as the bank for her mom. That is, instead of "putting aside" the money for her mom, "Sally" should take/keep the money, and then pay it out to mom if/when it's needed after mom has retired. Sally could decide on some reasonable amount of interest and compounding.


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## marina628 (Dec 14, 2010)

My friend is Debbie and mom is Doris .Debbie wants to take the rent and invest so down the road when Doris needs a nursing home she has some money put aside there.She only started charging her mom rent 15 months ago after seeing her piss away all her money.Debbie is a hard worker and earns at best $35,000 a year and she has a home ,savings ,put her kids through school.She has done well in spite of the poor example her mom has shown her.
She loves her mom but don't want her mom to drag her down in the future ,hoping to get some specific investment advise for her case ,that amount of money and time frame.


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## Guest (Jan 5, 2011)

Well, if the mom's in Canada I'm thinking she's entitled to about $1500/month at age 65 (which the daughter might look into and confirm) which should pay her way ... and will be payed out monthly so as long as she's not spending on credit, that should take care of any overspending idiosyncrasy. If the daughter wishes to put aside about $30K (the $800/month x 3 years) for her mom, the daughter might simply save it (highest probability it's there in 3 years) or invest it (lower probability) ... that's completely up to her ... it is her money. The main thing I think the daughter has in mind is that a sum of about $30K be available to the mother when and as she needs it, and also not available as a lump sum. A trust of some sort comes to mind. And I'm thinking the daughter is likely not declaring that $800 and so at least owes her mom that rent rebate


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## MoneyGal (Apr 24, 2009)

If this is Debbie's actual worry - that mom will need the money to support nursing home expenses - then what I proposed makes even more sense, because mom's expenses will be increased (= her subsidy decreased) to the extent she has private resources available to finance her care. 

(However, if you meant the phrase "nursing home" as a generic substitute for [non-subsidized] "retirement residence," my advice might change...but probably not.)


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## marina628 (Dec 14, 2010)

The daughter does claim the rent money on her taxes and her mom has only paid her rent 15 months .Debbie is thinking of when her mom can't care for herself ,Debbie needs to work another 20 years or more herself and don't want to have to work full time and worry about her mom's care down the road.This lady has declared bankruptcy twice in her life and just blows her money big time.She has no life insurance she has nothing ,lives paycheck to paycheck.I guess I should also mention the drinking problem .


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## Guest (Jan 5, 2011)

To rephrase, if it was me, I'd do what I did for a friend of my moms ... I looked into CPP, OAS, and GIC and I found that those provided slightly more than the monthly fee to stay in a home ... a shared room, 3 meals a day, housekeeping, laundry, ... and 24/7/365 supervision. My opinion ... just about perfect for the person you've described. The daughter has no ongoing responsibilities with the exception of looking into it and setting it up ... not overly burdensome imo.


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## Guest (Jan 5, 2011)

Oops ... GIS


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## olivaw (Nov 21, 2010)

The money belongs to the daughter, both ethically and legally. She may have every intention of helping out her mom in the future (and good for her) but it is still her money because it is collected as rent. She probably has other expenses associated with providing housing for her mom. If the daughter views it that way; would she be comfortable investing the funds along with her own investments following whatever overall asset allocation mix she has chosen for herself? (E.g. 60/40, 70/30 ...). Then, when her mom can no longer work, the daughter might be in a position to help her out financially. 

The bigger challenge is to find a way to help the mom deal with her drinking problem. 

Debbie sounds like a great daughter.


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## Berubeland (Sep 6, 2009)

Tell your friend about a wonderful 12 step support group called Al Anon

There she can learn that it's not her job to take care of her mother. You cannot help a person who is not helping themselves. What happens instead is that the responsible person gets utterly exhausted managing a situation that cannot be managed because the other person is not participating in their own salvation. 

The end result is that like the person trying to save a panicking drowning person they both drown. It's like pissing upwind. 

Tell her to save the people who can be saved. Herself and her children rather than her irresponsible mother who makes more than she does. If she feels like she needs to have her mom live with her then at the very least save the money in an resp or her own retirement fund and let her mother enjoy the natural consequences of her own behaviour. 

While this may seem very harsh, I speak from extensive personal experience after living with 3 alcoholics. I spent my energy plugging holes in a sinking ship while they spent their time punching more holes in the hull


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## Bupp (Nov 13, 2009)

I think that your friend's mother would be a good candidate for long term care insurance.

Alternatively, how about taking the ~approx 30,000 and buying an annuity for the mother. Supplements her income, and no way for her to spend it.


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## marina628 (Dec 14, 2010)

Thanks for all the advise everyone,pretty sad situation ,I love my friend though so trying to help as much as I can.It just motivates me more when I see others wasting away their opportunities.


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## Cal (Jun 17, 2009)

MoneyGal said:


> If this is Debbie's actual worry - that mom will need the money to support nursing home expenses - then what I proposed makes even more sense, because mom's expenses will be increased (= her subsidy decreased) to the extent she has private resources available to finance her care.
> 
> (However, if you meant the phrase "nursing home" as a generic substitute for [non-subsidized] "retirement residence," my advice might change...but probably not.)


Couldn't she continue to charge the mom rent, even when the mom is fully retired to allow to save for something like nursing home expenses or something...


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## MoneyGal (Apr 24, 2009)

Yes, but true "nursing home" care is 100% subsidized for qualifying residents. If you mean saving for a "retirement residence," that's something different.


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## Bupp (Nov 13, 2009)

I think the idea is to try to get mom into a private room. This will require shilling out some cashola.


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