November 5, 2007
You may have an interest in this.
There is a new type of retirement mutual fund that pays you monthly by sending out a check representing a designated percentage of your holdings every month. The payout which is essentially an automatic withdrawal program, draws primarily on dividends and income, with any additional amount needed taken from principal.
Fidelity is the first major firm offering these Income Replacement funds and has 11 versions. Each has a balanced portfolio of stocks and bonds based on a different horizon date indicating when the money will be used up, ranging from 2016 to 2036, based on your life expectancy. As portfolios grow in value, so do your payouts. Vanguard plans to launch three similiar funds next year.
The one caution is that this approach can leave you with little money if you live beyond a fund's horizon and lack other assets.
If you are interested in learning more about these kind of funds, check with Fidelity and Vanguard for more detailed information.
Pete Lipke
|
|