Expert: Warren Boroson - 12/29/2003

Question
Mr. Boroson,
I'm 76 and retired. I currently have 60% of my retirement funds invested with Vanguard in the following allocation. Wellesley Income fund 18%
GNMA fund 45%, Star fund 31% and Growth and Income fund 6%. My other 40% retirement funds are in C/D's which until the year 2005 are returning 7.5%. The vanguard funds and the C/D's are IRA dollars. This year for the four Vanguard funds the interest received was 3.6%. My question is as my sole source of income is as detailed above plus social security, is there a suggestion you could make that would enable me to derive more income.
        Thank you,
             Dave  

Answer
Dear Dave--

Your portfolio seems to be 40-45% in stocks, which is reasonable--STAR gives you your biggest exposure to the stock market--

But you have too much in mortgages--and not enough in junk bonds or foreign bonds--even STAR has mortgages in it--

Yes, junk bonds are risky, but Vanguard's High-Yield Fund is among the safer ones--and recently it was paying 7.5%--it just reopened--but don't put much money in it--maybe 5% of your portfolio--

Other funds you might consider, for more diversification: Harbor Bond and T. Rowe Price Spectrum Income. The second has up to 20% in high-paying stocks.

Let me know what you do, ok? Warren