I have about $190,000 invested in five Fidelity funds: Aggressive Growth, Blue Chip, Biotechnology, Electronics and Technology. I am 61 and I will need this money next year to live on. I am nervous about this volatile market. Do you think my portfolio is too aggressive?

Paul's Answer:

Let’s see, do I think water is wet? Do I think flowers will bloom this spring? Yes! Yes! Yes!

Here’s why I say that. I believe there is a reasonable chance that the stock market will undergo a major correction or pullback in the next year or two. I’m not predicting it, but I think it definitely could happen. In a major shakeout, your funds could lose half their value. That has happened before.

If you really need this money to meet your living expenses next year, then you are engaging in what psychologists would call risky behavior.

If you want to participate in expected stock market gains before you need the money for living, then keep some of your investments in stock funds. But for heaven’s sake, get at least two-thirds of that money – more likely 80 percent of it – into bond funds. Don’t wait more than five minutes to think about it. Pick up the phone and call Fidelity today!

What Fidelity bond funds should you invest in? Our Model Portfolios suggest Fidelity’s short-term and intermediate-term bond funds.

Remember, every dollar you leave in those aggressive equity funds could shrink to 50 cents by next year when you need it. If the quality of your life in 2001 depends on having that money, your current portfolio puts your near-term future in jeopardy.