Conference nyoss1::market_investing

    We need to know more: how many years before she retires?  How much
    other income is she likely to have when she retires (percentage of
    requirement is all we need), other than this fund?  What's her risk
    tolerance?  What's her expected lifespan after retirement?  Is this
    plan taxed yearly or on withdrawal?
    
    In general, if you have more than a decade to go, people recomend
    equity funds (scratch the Income and Money Market funds).
    
    		-John Bishop

Hi John,

 My sister will be retiring in 14 years and I would guess her expected
lifespan after retirement would be 12 years. This investment, 6% of her gross
income should account for 50% of her retirement income. The retirement plan is
only taxed on withdrawal. Her risk tolerance is very low and needs a safe
investment. Most/all of the retirement income will be needed to cover basic
living expenses.

Regards ....Arthur 

    If her risk tolerance is low, and still expect moderate returns, 
    I would recommend balance funds.  Balance fund usually spreads
    its assett amoung cash, bonds and stocks.  Both Vanguard Wellington and
    Fidelity Balance are excellent balance funds.  Wellington is
    rated 4 stars by Morning Star and Fidelity Balance is rated 5
    stars.  If my memory is correct, both funds generate about 10%
    return in 1992.
    
    Your sister should probably split between Money Market funds,
    Income funds and Balance funds.  I am not familiar with the
    income funds on your list and cann't give you specific information.
    
    Hope this helps, Wendy

The Mutual Fund Investor Association (MFIA) has in its current recommended 
Income and Preservation Model 55-60% balanced funds, 30% limited/short term bond
funds, and 10-15% in money markets. Based on your list in .0 I would have 
30% in both Vanguard Wellington and Fidelity Balance, 10% in Vanguard Money 
Market fund, and 30% in whichever income (bond) fund has a average maturity of 
10 or less years.

	SWAG

Thanks for all the help, I will pass this information on to my sister.

Regards ...Arthur

    I would let the balanced funds take care of the short term bonds.
    There should be some growth % still with her 25+years of need.
    
    35% Wellington       or     40% Wellington
    35% Fido Balance            30% Fido Growth and Income
    20% Fido Growth             20% Fido Balance
    10% Money Market            10% Money Market
    
    My 2%

    
    just curious...
    
    How were the %'ages determined in -.1?
    
    

    The second mix contained more risk than I should have put in for the
    situation so I'll strike that and review the first model.
    
    I still think growth is needed as well as safety. Both the Wellington
    and Balanced funds are "balanced" funds and should make up the
    foundation of the portfolio. That is, a mix of equities that pay
    dividends and some that are 'growth' along with bonds. The Fidelity
    Balanced fund as returned 13.4% avg annual return over the last 3
    years. Wellington, though lower rated (A vs D), has returned 11.4%
    over the same time. AIM charter has returned slightly more but is much
    more volitile in nature, including a one year total loss, after
    expenses, of -1.7%
    
    I like both funds for the 70% balance mix. I think the returns are made
    at minimal risk. Both Vanguard and Fidelity are rock solid companies.
    
    The 20% growth is there because you need some expansion of investment
    at any age. The Fido Growth company returned 22.5% over the last 3
    years. It would be tempting to place more in here if I were able to
    assure this person that this performance is repeatable but we all know
    about past performances. Still, I feel 20% is warranted here.
    
    The 10% money market serves two purposes: one is sure safety, the other
    is to provide a steady, slightly positive growth to the overall mix
    to bring-up the lagging fund in the group.
    
    The other funds just don't measure up in my estimate. The Fido G+I 
    would be too risky as would Calvert and AIM.
    
    And my 2%, well, it comes via Fortune, Money, Kiplinger's and Barrons,
    but I'm not wealthy either so I keep the other 98% to myself.
    
    Bob

    (A previous long note disappeared when my remote session was killed;
     what follows is a short version:)
    
    I assume:
    
    o	Your sister has 14 years of emplyment to go;
    o	The the account will be the main non-Social Security source
    	of post-retirement income;
    o	The loads on the loaded funds are the same as they would be
    	for individual accounts (not waived);
    o	This is for new money going in, not allocation of existing
    	money;
    o	That there will be no re-balancing of the accounts (no active
    	management) and there is no present balance;
    o	that the account is tax-advantaged in the manner of our SAVE
    	plan;
    o	The world will not change dramatically (e.g. Social Security
    	cancelled).
    
    My recommended allocation:
    
                  1) The Income Fund Mutual Funds            0%
                  2) Vanguard Money Market Fund             10%
                  3) Calvert Social Investment Fund          0%
                  4) Vanguard Wellington Fund               25%
                  5) Fidelity Balance Fund                  20%
                  6) Fidelity Growth and Income Fund         0%
                  7) Fidelity Growth Company Fund           35%
                  8) AIM Charter Fund                        0%
    
    Why:
    
    1	5.75% load, duplicates others;
    2	Money-market for disinflation and minimum predicted results
    	would be cut in favor of an internation fund if one ever shows
    	up, or more in the growth area if she can handle the on-paper-only
    	volatility;
    3	Avoid funds with goals other than money (unless you suffer
    	greatly from guilt);
    4	Low costs make this a winner, but low expected return keep
    	it down to 25%;
    5	Duplicate of 4, with a load, but good for a person who doesn't
    	like risks to have almost half in balanced funds;
    6	Loaded, no great expected return;
    7	If you plan to retire on this, you have to have lots of growth,
    	as 14 years times 6 percent of annual income is only going to
    	start with a raw (pre-return) base of .84 of your annual income;
    	long-term you can get an income of between two and five percent
    	from capital.  If she wants 50% of her annual income from her
    	retirement capital, it has to wind up about ten times her annual
    	income at retirement.  So risks have to be taken!
    8	Loaded.
    
    Always remember to factor in inflation, by the way: and expected return
    of 10% is really 6% or so, now--and possibly less next year.
    
    		-John Bishop