With the 4% rule, she should be able to withdraw CHF 1000 per month (12k per year), adjusted for inflation. That’s less than what has been assessed as her needs so there’s a real chance that she’ll draw her assets down to less than 100k, which would allow for her to qualify to the supplementary benefits of OASI.
I would study those and be ready for if/when that occurs.
[DE]: Ergänzungsleistungen zur AHV und IV | Merkblätter | Informationsstelle AHV/IV
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With that in mind, in this particular case, I would aim less at portfolio preservation and more at favoring more upside, if she can stomach the risk, that is (I know my parents won’t consider anything more exotic than a medium term note for their own assets so the full range of investment products may not be available).
For the discussion about fixed income products, I would refer to the Wiki: Short guide to CHF fixed income options
In the current times of likely future negative interests, I may put some assets in medium term notes but would favor keeping cash on bank accounts (ideally max 100k per bank to benefit from esisuisse insurance. If not feasible, then I would still assess if a money market or bond fund would not be suitable (taking a bit more risk for neutral or positive return expectations rather than eating negative interests).
For a discussion about dividend funds, I would refer to this topic: Monkey-brain ETFs: Dividend ETFs
I’d keep in mind:
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that dividends and interests are taxed but that capital gains (selling shares) are not.
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that selling shares usually incurs fees and costs that dividend distributions don’t.
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that dividends are distributed in the base currency of the fund, not that of the shares (double check if they’re distributed in USD, EUR or another currency when planning what fund to buy).
There is a psychological effect to recieving distributions but also one that goes with spending more than the distributions one get (having to sell assets anyway). Some argue for high dividends, I would personally make a case for using accumulating funds and selling as much as required according to the plan so that psychologically, the fact that selling assets is the normal process of funding retirement becomes more ingrained and less disturbing.
I would aim at some mitigation of fluctuations in case of major drawdown for psychological reasons (not seeing the assets melt at once if things go bad) so I would not personally go 100% stocks but would select a more conservative portfolio (standard would be 60/40. Using standards mimimizes the perceived personal liability of the advice giver as well as the risk of blame throwing if things turn bad).
I would personally see four options:
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keeping liquidity on a bank account and a single multi-assets fund combining stocks and bonds (ala Vanguard LifeStrategy series).
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keeping liquidity on a bank account, part of the assets on savings accounts or on medium term notes (check the withdrawing restrictions that can apply with savings account, they’re more and more frequent these days) and a global diversified stock fund.
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If she’s averse to investment products, keeping it all on savings accounts, drawing it down with time and relying on the supplementary benefits when it drops below the threshold.
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Resorting to using asset management solutions like her bank or VZ. They may be expensive but the end result will probably be supplementary benefits anyway so if doing so brings peace of mind to both your mother and the rest of the family, that may be well worth the costs. Edit: @TeaGhost’s post above is probably better advice on the issue than I can give myself.