Personal Finance Q & A

Use caution before taking junk-bond plunge Q. I'm considering taking my modest IRA (about $35,000) and putting it in a high-yield bond fund. I'm about 56 now, and don't plan on retiring soon. Is this a good move? D.R., via e-mail

A. "Right now, high-yield bond funds are not a bad investment, but I wouldn't put all my money there," says Lewis Altfest, of Lewis J. Altfest & Co., N.Y.

"I'd put one-third of the money in either the Northeast High Yield Fund or the Third Avenue Value High Yield Fund," he adds.

Mr. Altfest advises you split the rest between the Baron Small Cap Fund and T. Rowe Price Value Fund, which is aimed at mid-cap, large-cap stocks. They'll provide some risk, but less than so-called junk-bond funds.

Q. My wife and I just received a settlement check for $19,000 and want advice on where to use it. We have children, ages 6 and 12. Our mortgage is $1,374 a month, and credit-card debt is upside of $10,000. I'd like to pay down the credit debt, do some home improvements, set up a college fund, and invest in mutual funds.

D.G., New York

A "Assuming your credit-card interest is somewhere between 17 percent and 21 percent, I'd take $10,000 and pay off the credit debt" says David Bendix, head of Bendix Financial Group in Uniondale, N.Y.

"Try to get a home-equity credit line with an interest rate of around 8 percent for the home improvements," Mr. Bendix says.

He recommends putting $6,000 into a balanced fund with an stock/bond/cash mix, such as the Oppenheimer Quest Balanced Value Fund. Then put the remaining $3,000 for the kids' education into a tax-managed mutual fund, that reduces capital-gains taxes. Dreyfus (800-554-4611), Eaton Vance (800-225-6265), and Stein Roe (800-345-6611) offer low-cost entry-level funds.

Q I'm considering setting up a living trust for my son and two daughters, all married. How do I get started?

F.N., South San Francisco, Calif.

A Trusts, unlike wills, are private documents. And they generally incur fewer expenses than probate.

To activate a trust, set it up through an attorney. Helpful books include "Protecting Your Financial Future" by Lee & Kristy Phillips (Time Warner), and "How to Settle An Estate" by Charles Plotnick and Stephan Leimberg, (Plume).

Questions about finances? Write:

Guy Halverson

The Christian Science Monitor

500 Fifth Ave., Suite 1845

New York, NY 10110


About these ads
Sponsored Content by LockerDome

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.




Save for later


Saved ( of items)

This item has been saved to read later from any device.
Access saved items through your user name at the top of the page.

View Saved Items


Failed to save

You reached the limit of 20 saved items.
Please visit following link to manage you saved items.

View Saved Items


Failed to save

You have already saved this item.

View Saved Items