When to plunge in, when to swap funds

Q: My husband and I are retired. We have Social Security and income from IRAs, but we have no investments. Should we have some? My husband never buys stocks. I've seen a couple of interesting opportunities, yet he never wants to invest in them. Still, he encourages me to take my money and invest. What do you think?

D.S., via e-mail

A: "If you don't need to touch the money for at least five years, an investment program could make sense, especially if you would like to leave some assets to heirs or friends some day," says David Bendix, who heads up Bendix Financial Group, in Garden City, N.Y.

"You could look for individual stocks, but I would go with a mutual-fund group, since you will have access to professional management and instant diversification. Consider investing systematically, say a certain amount each month," Mr. Bendix says.

Q: I am a retired small investor. My money manager has my savings invested in the AIM mutual-fund group. What do you think of these funds? He's been somewhat non-committal.

D.G., Pitcairn, Pa.

A: "AIM is a very good mutual fund group," says Bendix. "Of course, some AIM funds are better than other funds. If you have all of your investment assets in one company, make certain you are well diversified, in small-cap, mid-cap, and large-cap funds, plus maybe an international fund. If you transfer money to another fund, weigh possible tax consequences, since transfers in a non-tax-deferred account are taxable events."

Also, he says, if you buy into another fund, wait until after the fund has made its capital-gains distribution sometime later this year, to avoid a tax hit. Check with the company on their dates of distribution.

Questions about finances? Write:

Guy Halverson

The Christian Science Monitor

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