I did my parents' federal taxes this weekend. I offered, and my mom accepted since she hates doing them. They fall into the super simple married filing jointly, two dependents, standard deduction, 1040A category so it was reasonably quick and easy even though my mother made me do them two different ways to determine how much they'd save if she contributes $5,000 to a traditional IRA.
Last year, she had completed her first full year at her second part-time job and hadn't set up withholding correctly so my parents were going to owe a bit when they filed her taxes unless she set up a traditional IRA and took a deduction for that. So, in late March of last year, she asked me to research investment options for her. I prepared a full slate of options for her, showed her what to look for when comparing the plan her insurance agent boss tried to sell her, and made a recommendation. She hemmed and hawed right up to the deadline and then decided to go along with my suggestion and invested in the Vanguard Target 2015 fund even though she was anxious about having any exposure to the stock market whatsoever. (My dad's 401(k) is entirely in something with guaranteed principal and meager interest rates.)
She spent the past year watching her balance go up and down as the stock market did its thing and fretted quite a lot. My mom doesn't think of this as a small fraction of a larger retirement portfolio, but as her money, money she doesn't want to lose. She has considered getting out of the fund and moving her IRA to an FDIC insured account at the bank, which probably isn't the best move for someone in her mid-fifties.
A couple of months ago, I asked her whether she planned to contribute to an IRA for 2007. Her answer was an unequivocal no, even when I suggested she could put this year's contribution in a cd if market volatility made her that uncomfortable. Then, of course, with two days before the deadline, she changed her mind and asked for guidance on where to put her money. My dad decided to jump on the bandwagon and fund a Roth for himself, something my mother has been urging him to do for months, even though she insists on investing in a traditional IRA herself. My dad has even less risk tolerance than my mother so he'll probably leave the money in a bank account for the next couple of decades, but he might as well avoid paying taxes on the interest.
I don't have time to hunt for the best rates right now. At this point, the best option seems to be an IRA of 30 day certificates of deposit that my bank offers. They can probably get better rates elsewhere, but the 30 day c.d. would give my folks the option to move their money in a month without penalty after they/I have time to do more research.
I'm not thrilled about being asked for investment advice. Based on the questions my mother asks, I do know a lot more about the rules for IRAs than she does and more about where to go for answers when I don't know myself so I guess it's understandable, but I worry that I'll end up talking her into things she isn't comfortable with, like the Vanguard target date fund, and she'll be upset with me if things turn out badly. I am not an expert.