Expert: Warren Boroson - 9/27/2009

Question
Hi Warren,

I have around $16,000 that I want to put into a more income/conservative type fund.  I'm willing to take on some risk (I want more than a money market) but I also may need to use this money in the next 0-3 years.  I like Vanguard funds and have been looking at their Total Bond Market Index and Lifestyle Income (20% stocks, 60 bonds, 20 cash) funds that both get 4 stars.  Any recommendations?  Any other funds/devices that I should be looking at?  Thanks a lot!

Answer
Dear Jason--

First, diversify. With $16,000, you can invest in more than one fund.  Maybe three or four.
Second, consider Vanguard Short-Term Corporate Bond. (Vanguard's bond index fund is a mid-term fund.)
Third, consider going outside Vanguard. I own Fidelity Floating Rate High Income Fund--
http://quote.morningstar.com/fund/f.aspx?t=FFRHX
And consider T. Rowe Price Spectrum Income, which is more diversified than a bond index fund. (I own that, too.)

Hope this helps.

WB