AboutWarren Boroson Expertise Author of "Keys to Investing in Mutual Funds" (Barrons) and "Ultimate Mutual Fund Guide" (Probus). Columnist for Gannett News Service.
Experience Author of 20 books; winner of 1996 Personal Finance award from Investment Company Institute and Washington University. Formerly on staffs of Money and Sylvia Porter's Magazine. Had a radio program (on WEVD)about mutual funds and a newsletter, FundDigest.
Question QUESTION: I'm 70 yrs. old and retired. I was wondering what type of mutual funds would best fit my situation? What specific funds would be best for my situation? How would I purchase the funds? Thanks
ANSWER: Dear Zac:
I cannot give you a good answer without knowing
+ do you need income now? will you need income soon?
+ what does your total portfolio look like? what % of your portfolio is in the stock market? what kinds of stocks do you own?
+ can you live on your income? From a pension, Social Security? Do you have children, and do you want to leave them a sizable inheritance? (If you don't need income, and want to leave an inheritance, you might invest more aggressively in the stock market.)
Assuming that you need income now or will soon, consider an income fund like Vanguard Wellesley Income, which is around 40% in the stock market. Similar funds are Fidelity Asset Manager Income 20 or 40; T. Rowe Price Spectrum Income. (The more a fund has in stocks, generally the riskier it is.)
Call 800-555-1212, and ask for the phone numbers of one or more of those fund families. Call up, ask for a prospectus and an application for a particular fund. Fill out the application, ask to have distributions sent to you (assuming you need income), and mail in the minimum contribution.
You might also put some money--20% of your total portfolio, perhaps--into an income or immediate annuity. Ask Vanguard or Fidelity or T. Rowe Price about these. They will pay you (and possibly your wife, if you have one) a monthly income for as long as you live.
Also, visit a large library and become familiar with Morningstar Mutual Funds, in the reference section. Look up, especially, the section on "conservative asset-allocation" funds in one of the thicker booklets. See what M* writes about the different income funds.
Finally, write again if you want more advice.
Best,
Warren
---------- FOLLOW-UP ----------
QUESTION: Thank you for the information. If I went with the Fidelity Asset Manager Income 20 would that be enough or would I need another Fund(S)? If the Fidelity Asset Manager Income 20 did bad then what would I do then? I was wondering if there was any other Fidelity Funds that would suit my situation?
Answer Dear Zac:
I would buy a few funds--just for diversity. The Fidelity Asset Manager fund plus, maybe, Vanguard 2005 and T Rowe Price Spectrum Income.
Another Fidelity fund you might consider is a Freedom fund--
Actually, as I said, what you should buy depends on what you own now--and whether you need income now--
