QWe are retired, with a limited income. At this time, my wife and I are taking out a loan in order to move into a less-expensive home than the one we are selling. After using a portion of the sale of our present home for a down payment on the new one, and after paying transfer taxes and real estate commissions, we expect to have about $150,000. As we lack long-term care and life insurance, we regard this as our security cushion. Given that we prefer low-risk investments, how should we place these funds?
Name withheld, San Francisco
A"First look for two long-term care insurance plans, perhaps using up to 2 percent of your $150,000 to pay for them," says David Bendix, president of Bendix Financial Group in Garden City, N.Y. Such a plan, he says, will help protect the remainder of your assets from being wiped out in an unexpected personal emergency.
"Second, I would split up the remainder of the assets into short-term and long-term investments," he says. "Put what you feel you might need during the next one to three years in short-term mutual funds, such as a government-bond fund."
Then, "put at least 30 percent of the remainder in a conservative stock fund," he says, such as an equity-income fund, a value fund, or a growth-and-income fund.
The rest of the assets could be put into corporate or government bond funds, including a GNMA fund, and/or balanced funds. Such funds are conservative and income producing, Mr. Bendix says.
QIf I sell stock for safety reasons, what should I do with the proceeds?
D.O., via e-mail
A"Put your proceeds into a money-market fund until you have a clear idea about what you want to do with it," says Bendix.
If you plan to keep it in storage for one or two years, then "after six months put it in a short-term or intermediate-term government or corporate bond fund," so as to maximize your returns, he says.
QWhere can I find understandable information about the latest tax rules regarding required distributions from IRA accounts? I turn 70-1/2 next year. I do not find the IRS website user-friendly.
L.B., via e-mail
ATry www.irahelp.com or www.fidelity.com. Both sites contain simplified explanations on taking money out of an IRA.
Questions about finances? Write:
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