Retirement Plans and No-load Funds by Malcolm Berko on Creators.com

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Retirement Plans and No-load Funds

Dear Mr. Berko: My wife and I retired last year from different companies. We moved my wife's 403(b) to an IRA, which was a real chore because the people holding that money wanted her to buy an annuity, and made it very difficult to move her retirement money to a simple IRA. Those teachers retirement people don't want to let go. On the other hand, it took my company just 10 days to move my 401(k) to a Schwab IRA. Now between the two accounts, we have $407,000 and need you to tell us how this money should be invested. We really liked your comments on No-load Funds and Exchange Traded Funds when we heard you speak in Boca Raton last March. Please tell us how you would manage a portfolio of No-load and Exchange Traded Funds for us. — F.S., Boca Raton, Fla.

Dear F.S.: I can't tell you how I would manage your retirement portfolio. I'd like to, but I can't without knowing lots of things about you, your wife, your finances, your risk tolerances, your short-term and long-term goals, your short- and long-term obligations, your retirement income, your personal balance sheet, your health and your lifestyle. And while this information may seem like a personal intrusion into your privacy, it's very necessary and enormously helps a portfolio manager make decisions for "the best of your life."

However, I can give you the following guidelines. Many portfolios should have a portion of their money in aggressive growth. The amount depends on your age, stage and objectives. A no-load mutual fund I like is Fidelity Advisor Small Cap (FSCIX - $22.49). The portfolio tends to follow the S&P 600 or the Russell 2000. So far this year, its total return is 22.8 percent. There are two others on my list: Scout Small Cap (UMBHX - $12.34) and the Exchange Traded iShares Russell 2000 (IWM - $61.05) both of which have done well this year. I also believe that many accounts should own some gold. And I like the no-load, $1.3 billion Franklin Gold & Precious Metal Fund (FKRCX - $40.09) that has a 52.2 percent return this year. I also like the iShares Comex Gold (IAU - $103.10).

Now we must add some growth to this retirement account and I'm partial to FMI Provident (FMIRX - $7.06) that has returned 20.1 percent this year. Alger Capital (ALARX - $17.02) and Fairholme (FAIRX - $28.14) may also be excellent choices.

The iShares S&P (500 Growth Index, IVW - $55.21) is an excellent growth ETF. Growth and income is also an important to a portfolio and I'm comfortable with Lord Abbot (LDFVX - $10.39) that has returned 19 percent return this year. First Eagle (FEVAX - $14.26) and Foster Value (FVALX - $11.34) are also good choices. Vanguard Value (VTV - $46.71) is a good ETF.

Most accounts must also have international exposure, and I'm partial to: Matthews Asian Growth & Income (MACSX - $14.98) that returned 35 percent this year. I also like Matthews Pacific Tiger (MAPTX - $17.36), and iShares MSCI EAFE Index (EFA - $55.99) is a good ETF. Real estate should also be represented and CGM Realty (CGMRX - $20.11) may be the best with a 26 percent return this year. On the bond side, I'm impressed with Laudus Mondrian International (LIFNX - $11.65) and Loomis Sayles (LSGLX - $16.07) with 9.4 percent and 22.1 percent returns this year. Pimco Total Return (PTTDX - $10.91) is an investment-grade income fund returning 11.7 percent this year. And Wells Fargo S-T Hi-yield Bond fund (STHBX - $8.04) with a 13.1 percent return is also on my list. Of course, American Century Inflation (ACITX - $11.42) invests primarily in TIPS and has returned 8.4 percent in 2009. And finally, DWS Reef Global Infrastructure (TOLSX - $8.12) with an 14 percent return and Jennison Natural Resources (PGNAX - $45.48), which posted a 57 percent, return this year. These and a few others could be selected for your portfolio; however, the dollar amounts in each category depend upon your adviser's advice, after you and he review and discuss your investor profile.

Of course, you can pick up the phone and buy these funds, but first, you must ask some important questions. (1) What percent of my money should I invest in each fund? (2) What percentage of my money should I invest in each sector? (3) Should I buy them right now or wait for a lower price? (4) Are these funds still capable of meeting my objectives? (5) After I buy these funds, after what point should I sell them? (6) Will a change in a fund's portfolio manager be a good or bad omen? (7) If a fund begins to move lower after I buy it, at what point should I sell it? (8) What important questions should I ask of the fund's portfolio managers? These and other questions are important because they give you the confidence and knowledge to guide your decision.

Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775 or e-mail him at mjberko@yahoo.com. To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.