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Author: GrayWulff Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 169  
Subject: Re: Advice requested Date: 8/17/1999 10:23 PM
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Here are a few questions you need to ask yourself:

1. How are those funds doing compared to the S&P500? Look back as far as you can. Don't settle for just five years. If they aren't keeping up, consider selling them and buying an index fund like Vanguard's VFINX.

2. Bond funds and bond-stock balanced funds are poor investments. They don't guarantee cash when you need it and they don't have the growth of pure stocks.

Consider selling all your bond and balanced funds and buying a five year bond ladder instead. Calculate carefully how much cash you need each year and then buy individual T-Bills or investment grade (BBB or better) corporate bonds. With the amount of money you have to invest you will probably want them to mature once or twice a year.

If the market is down badly when it is time to replace a bond, wait until it recovers, and then replentish your ladder. That's why it is a five year ladder.

3. Pay off that credit card debt! $6,000 cc debt eats up the return from $18,000 of bond investment. Sell $6000 of bonds and pay off the debt.

4. The mortgage is tougher, presumably the interest rate is around 7 or 8%. You might want the leverage that that $60,000 provides. It can be hard to get credit when you need it after retirement. Keep it if you feel you need it, but make sure it is invested in such a way that you get a good return. Budget for the mortgage payments in your bond ladder.

Cheers,
GW
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