NEW YORK — Applying Ethics To Your Inheritance
Q Last year, I inherited $10,000. I am in my late 50s, and still have a substantial mortgage. I do not wish to invest in tobacco, liquor, or drug companies.
The money now sits in the Vanguard 500 Index fund, and a savings account. I would like to do something more imaginative with it. Any ideas?
Berkeley Heights, N.J.
A "The good news is that (with the Vanguard 500 Index fund) you've done better than almost all investors," says financial planner Gary Schatsky. "The bad news is that the fund has a few of the types of companies in which you are reluctant to invest."
Still, says Mr. Schatsky, "I would stay with the 500 fund, which is one of the finest mutual funds anywhere, and then make occasional contributions to charity from your earnings."
If you feel uncomfortable, then consider a "good works" fund, he says, including the Domini Social Equity Fund (800-782-4165, up 15 percent this year; minimum, $1,000), or the Pax World Fund (800-767-1729, up 9 percent; minimum, $250). You might also consider the American Trust Allegiance Fund, which shows decent returns and avoids the kinds of companies you do.
Schatsky also suggests a bond fund (Vanguard Short-term Corporate: 800-635-1511) and a money fund (Vanguard Prime Money Market). Both require a $3,000 minimum.
Q I have an untouched 401(k) savings plan held by the company from which I retired. The plan includes company stock and shares paid for by the company. I plan to roll over this account into an IRA when I reach age 70. How should I handle the company stock at that time? And is there a good book on rollovers?
A "If it is in your 401(k) plan, the company stock would be treated like other qualified assets. Just roll the stock into your IRA," says David Bendix, president of Bendix Financial Group, in Uniondale, N.Y.
If you want high dividend yields, consider some bond funds within your IRA, Mr. Bendix says. If you seek growth, try equities. Or use a mix of funds. The institution handling your rollover IRA will be able to help you set up a diversified portfolio and guide you through the rollover process.
Jane Bryant Quinn's "Making the Most of Your Money" (Simon & Schuster) has a lot to say about IRAs and rollovers.
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