Consider time frame before investing

Q: I've parked my savings into one CD and keep the rest of my cash in a money-market account. When the market stabilizes, what do you think of the conservative approach of investing 50 to 60 percent in CDs and bonds, and dividing the rest between small-, mid-, and large-cap mutual funds?

D.G.P., Phoenix

A: "That approach is conservative and appropriate, assuming you won't need the money during the next five years," says Tim Schlindwein, a mutual-fund consultant with Schlindwein Associates, in Chicago. But moving into stocks may be risky if you need the money sooner than that, he adds.

Q: I just turned 59-1/2 years old and still work. Can I now roll over my 401(k) into an IRA?

G.M, via e-mail

A: You can't do a rollover "until you leave your 401(k) plan," says Mr. Schlindwein. That could occur by quitting your job or just quitting your participation in the plan. But why do that, he asks, if you are getting a corporate match?

Once you do leave the plan, be sure you establish a direct transfer with your rollover, so as to not take possession of the account assets. If you take possession, you will be saddled with a very large tax bill, including penalties.

Q: Value funds are in the news. What are considered "value" funds? What characteristics do they possess that are different from stocks?

P.B., via e-mail

A: Value funds are made up of stocks. The stocks they hold tend to be inexpensive in relation to such matters as earnings, dividends, or sales. That is why value stocks are said to have low price-to-earnings ratios, compared with "growth stocks," which usually have high P/E ratios. These stocks, in other words, have "intrinsic" value, but can seem pokey compared with hot-shot growth stocks, which are often tech stocks. Value is currently sizzling - at least, compared with growth stocks.

Questions about finances? Write: Guy Halverson, The Christian Science Monitor, 500 Fifth Ave., Suite 1845, New York, NY 10110; E-mail:

(c) Copyright 2001. The Christian Science Monitor

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