Mutual Funds/mutual fund investing


Hello, I'm 60 years old and I have a 401k through my work with Fidelity Investments. I own several funds but my core fund is Fidelity Freedom 2020 Fund. Since the S&P 500, the DOW and Nasdaq are at or near record highs and there is talk about rising interest rates in the near future, I'd like to reduce my equity exposure but also keep my expenses low.

In this regard, I'd like your opinion on Fidelity Index Income Fund and Pimco Total Return Fund Institutional Class.

Also, would the Fidelity Freedom Index Funds be a better choice than the plain Freedom Funds as far as achieving comparable returns with lower expenses?

Thanks, John

Dear John--

It's true that when interest rates go up, the stock market may decline. Bonds may become more attractive.
But stock dividends are pretty attractive at this point.
So I wouldn't worry much.

At 60, you might have 40% in stocks--according to one rough guide.

The funds you mention are pretty good. You might check what M* writes about them in detail.

Freedom 2020 gets 3 stars,  Index Income 2 stars, PIMCo Total 4 stars.

My own favorite fund--and I'm 80--is Vanguard Wellesley Income, which is 40% conservative stocks.

Between an index fund and a non-index fund, I'd choose the index fund. Less risk.

Good luck!


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Warren Boroson


Author of "Keys to Investing in Mutual Funds" (Barrons), "Ultimate Mutual Fund Guide" (Probus), "How to Pick Stocks Like Warren Buffett" (JKLasser), and "The Reverse Mortgage Advantage" (McGraw-Hill). Former financial columnist for Gannett News Service.


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.

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