Ask Merriman

Investors always have questions, and we receive hundreds every year. While we cannot respond to them all, we address some on our weekly radio show and use others to help us choose article topics.  Using the submit a question tab above, you can send us a question to be answered by our team of educators and financial advisors.  We regularly post new questions and answers here. The links below will lead you to them.

 



How should I invest CD proceeds at age 60?
September 13, 2010

Question:

I inherited a CD a few years ago which is coming due soon. It is worth about $54,000 and has paid a good interest rate that I don't imagine I could match today. I need to reinvest this money in something relatively safe (I am 60 and can't afford to lose the money). But I also want some growth potential because I won't be retiring for another five years or so.  What would you suggest?

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I'm worried that exchange-traded funds are really just derivatives in disguise
August 23, 2010

Question:

I have tried to invest in all the asset classes you recommend, and mostly I am using ETFs. I hear so much these days about the dangers of derivatives that I wonder if that’s what ETFs are. I like what’s in them, but I know they are more complex than owning individual stocks, and I don’t understand exactly how they work. I don’t want to find out 20 years from now that I’m not holding anything real, only some kind of derivative that’s worthless. 

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Am I using your monthly income bond fund recommendations correctly?
August 11, 2010

Question:

I am retired and have my IRA invested with a conservative 40% equity allocation in the Vanguard equity funds you recommend. For the fixed-income part of my portfolio, I'm using the four funds you suggest for monthly income. This is because I plan to take out the income next year, and I want to build up that part of my portfolio with higher-yielding funds. Am I making a mistake doing this?

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Should I make peer-to-peer loans?
July 21, 2010

Question:

I'm a young investor and want your thoughts on peer-to-peer lending. Sites like LendingClub.com are pretty open about returns, default rates, etc. Based on the past three years, this has been a pretty reliable way to get an approximately 10% compound return. I realize that peer-to-peer lending doesn't have the 70-year history of stocks and bonds, but what do you think about making it a small part of my portfolio?

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What annuity option should I choose?
June 29, 2010

Question:

I am approaching the age of retirement after a career in teaching, and I have a couple of options for taking my pension. One option is to take a single life annuity benefit of $1,040 per month. The other option would give me a lump sum of $35,320 plus a reduced monthly benefit of $793. Which one would be better for me?

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How should I allocate my taxable investments?
June 14, 2010

Question:

Several articles on your site refer to taxable and non-taxable portfolios. I don’t see examples of how to allocate taxable accounts. I have approximately equal amounts in taxable and tax-deferred accounts, and I’m looking for help in allocating the taxable one. I am in my middle 50s and plan to work for at least another 10 years. How should I allocate the taxable portfolio? 

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Do I need bonds at age 30?
May 12, 2010

Question:

I am 30 years old and invest fairly aggressively. I have been advised to keep 10 to 15 percent of my portfolio in bond funds, but that seems to me like a waste. I can’t see that 10 to 15 percent in bond funds will do me much good except to satisfy some formula. Am I missing something?

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How do I allocate my 529 for two children?
May 05, 2010

Question:

I am saving money for two children who are heading for college. One will start this year, and the other will start in six years. I have saved approximately $20,000. What asset allocations would you recommend in these 529 accounts at Vanguard?   

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Why are you such big fans of index funds?
April 26, 2010

Question:

If you compare the Fidelity Low Price Stock Fund to Vanguard’s small-cap and mid-cap index funds, you will see Fidelity’s three-year, five-year and 10-year performance leaves the index funds in the dust. Fidelity's fund is a small to midcap blend fund. If it’s so easy to find funds that do much better than index funds, why do you recommend index funds? If actively managed funds make you more money in the end, you’d be better off rather than worrying so much about expense ratios and turnover. Please answer my question. I am getting different answers from every advisor. 

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I'm 72 years old and must take an RMD. Can I convert this to a Roth?
April 07, 2010

Question:

I am 72 years old and must take an RMD (required minimum distribution) from my traditional IRA.  Can I convert this to a Roth?

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