DEAR BRUCE >> I'm 34 years old. My husband and I own our home and hope to buy a new home in the next two years. We want to rent out our current home to students at the local college. This way they can cover our mortgage payment.

With careful savings, we will have $50,000 in my "down payment fund" at the end of this year. I had also planned on putting $5,500 into my Traditional IRA fund (we make too much for Roth IRA), but my husband thought that we'd be better off, with the way the stock market has been going, just putting that money into the down payment fund (earning 0.9 percent). We currently have $184,000 in combined retirement funds. What are your thoughts on that?

— J.H.

DEAR J.H. >> It seems to me that you have a good handle on what you're doing. At 34 years old, you're certainly demonstrating the ability to put aside, save and invest. There is no substitute for that.

One quarrel I have is with investing substantial monies in mutual funds. Mutual funds currently are paying a very low return. I would be much more comfortable (even with the market going up and down) investing in strong American companies paying a dividend. You'll easily have a combination of growth and dividends with a decent return of 5 to 7 percent. Otherwise, I have no problem with the plan you outlined. I congratulate you.


DEAR BRUCE >> I am a 78-year-old single, retired man with $800,000 in total assets. Most of my assets are held in mutual funds with most of that held in an IRA that generates about $32,000 per year, plus I receive Social Security benefits of about $22,000. The IRA is comprised of $140,000 in bond funds, $70,000 in international stocks and the rest in stock mutual funds.

I want to maintain my current lifestyle, which is not extravagant, and leave a legacy to my three grown children. I owe $17,000 on my mortgage, but have no other long-term debt. My concern is that I may be too heavily weighted in stocks, even though the stocks are held in mutual funds. I have been advised to put $150,000 in bonds, laddered to provide interest payments over several years. I am not familiar with bonds and thus am not comfortable with that advice.

— R.J.

DEAR R.J. >> On balance, you have a good plan, with assets totaling $800,000 and $22,000 per year in Social Security income. However, I must criticize your choice of mutual funds. There was a time when mutual funds were extremely good, but that time has long since passed. While they are safe enough, they barely cover the taxes.

The idea of putting $150,000 in bonds, laddered to protect the interest payments, is a good one. You say you're not familiar with bonds and you're uncomfortable with that advice. I say get comfortable and learn about bond investing. A single man who's retired has plenty of time to do research.

Send questions to