Ask Paul: Where should I invest $80k to provide for my disabled brother?

Dear Paul,

My mother passed away in 2020 and I've inherited the responsibility to manage the affairs of my 38-year-old disabled brother.

He lives with my aging father in the family home and receives a disability pension of $1000 a fortnight, as well as care and support via the NDIS. 

My mum managed to save $100,000 of his pension in a cash account, into which he continues to put $150 a week.

I'm not yet sure what he will use that money for in the future, but know we ought to protect it and invest it somewhere.

I have considered keeping $20,000 in the cash account to be readily available and putting the remaining $80,000 into a managed fund or ETF. I would appreciate your assessment and suggestion. - Scott

My commiserations, Scott. Losing your mum is really sad. Good on you for looking after your brother.

Your mum would have been so worried about him, so he is fortunate to have you take over 
the responsibility.

At age 38, I am assuming he has a long life in front of him. But as a general guide, I don't think funds should be invested into growth markets unless they can be left there for a minimum of five to seven years, preferably longer, to allow for market ups and downs.

Your plan sounds reasonable: $20,000 for cash reserves, health emergencies and other personal needs your brother will have; the other $80,000 sitting in cash, if not needed in the short term, is simply going backwards thanks to inflation and generating next to no returns.

A low-cost managed fund (indexed managers like Vanguard and BlackRock offer broadly diversified funds for next to nothing in fees) or a diversified ETF would do a much better job, but with more risk.

The thing that mitigates investment risk is time in the market and diversification, which these funds offer.

My very best to you and your brother.

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