Seeking comfort in one mutual-fund family

Q As a small investor, should I be comfortable having all my savings in AIM Mutual Funds? Also, do mutual funds generally tend to grow ever so slowly, gaining some, losing some?

D.G., Pitcairn, Pa.

A "AIM, like all fund companies, has some very good funds and some so-so funds," says Lawrence Solomon, statistical editor with the No-Load Fund Investor, in Irvington-On-Hudson, N.Y. "Your letter, however, raises several key issues," he says.

First, "the general rule is that you should have at least 6 to 12 months of emergency savings in liquid assets that you could easily tap, such as a money-market fund."

Second, AIM is a load-fund group, so you are paying commission charges. But AIM is owned and managed by Amvescap which offers no-load Invesco funds. If your funds are not in a tax-deferred account, such as an IRA, you would incur a tax hit to shift them to a no-load Invesco fund. But still, you might explore whether it would be feasible for you to do so, he says.

Finally, most mutual-fund gains occur in just a few trading days each year, Solomon says. One study showed that out of a recent 30-year period, most market gains occurred in just 90 different trading days.

Q I'm a widow, living on Social Security, pensions, and income from the sale of a home. I need access to the money during my lifetime, but want to leave most of my savings for a grandson's college education. He is now 12 years old, and the beneficiary of two credit-union accounts and three certificates of deposit. The total estate is worth less than $50,000.

P.A., Laguna Hills, Calif.

A "Consult a local attorney and have him draft a trust," says Pat Schipper, a financial consultant with Prism Financial Group, Overland Park, Kan. "Within the trust, which can be set up within your will, you can designate your grandson as the beneficiary of various accounts, to pass to him for college education."

You will need to designate a trustee. And change the beneficiary of the accounts from your grandson to the trust. Otherwise, the accounts could pass to him before he reaches his college years.

Questions about finances? Write:

Guy Halverson

The Christian Science Monitor

500 Fifth Ave., Suite 1845

New York, NY 10110

E-mail: halversong@csps.com

(c) Copyright 2000. The Christian Science Publishing Society

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