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Q. My dad recently moved into assisted living and is about to sell his paid-off house. He has a long-term care plan and a generous company pension, so for now he will have about half a million dollars and growing at age 88. He’s in fairly good health, other than his body failing. I have power of attorney. Dad doesn’t need the money now, but if something goes sideways, he might at some point.

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I’m thinking of putting most of the money in a solid fixed-income fund and keeping $30,000 in cash for an emergency. Seeing that he’s 88 years old, I’d like to focus more on preservation of capital and less on growth. But I was wondering if there’s something else that might be a better place to stash it for now. Most of the money will be in a trust.  —Thanks, Peter

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FP Answers: Hi Peter, I am sure you appreciate the confidence your dad has placed in you to be his power of attorney. It is an honour that comes with a lot of responsibility and work to make sure your dad, and his wishes, are looked after. At the same time, you and possibly your siblings may have differing thoughts and needs which can make the role of a power of attorney a little more challenging.

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If your dad’s future needs will be looked after with his generous pension, why not invest in something that will grow his money rather than something designed for capital preservation? Assuming you are going to receive the money when your dad dies, invest it the way you would invest your own money. Of course, it may lose value and if you have siblings they may complain it’s down, but they also may complain that you didn’t try to grow it and they could have had more. Plus, who knows what the future holds: Your dad may need the money.

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What if you gift the money to yourself? If you are going to get the money anyway, why not take it and use it today, especially if you are having some financial difficulty? It will save your dad some tax, avoid probate, and besides, if the money goes through the estate, who knows how long it will take before it gets to you? If your dad needs more money in the future you can always help him out, assuming you haven’t spent it all.

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Those are a couple of thoughts I sometimes hear, but they come with risks. It sounds like you want to be prudent with your dad’s money and ensure it is safe and available to him if it is ever needed. That is one reason why you are in the role of the power of attorney.

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The big risk with taking a capital preservation-only mindset is inflation. But inflation is normally a long-term risk and as a person ages, inflation risk reduces. Your dad also has Canada Pension Plan (CPP), Old Age Security (OAS) and a company pension, which are all indexed to inflation.

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The first investment decision to make is which type of account this money should go in and for your dad that will be either a non-registered account or a tax-free savings account (TFSA). Maximize the TFSA first and the rest can go to a non-registered account.