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Financial Q&A: Protect your principal when money is tight

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Q: I sold my house and put $45,000 in a money-market account and have $50,000 left to invest. Should it be in bonds? I also have $20,000 in mutual funds in an IRA and Roth IRA. I'm 66, receive $647 a month in Social Security, and have enough in savings to cover three months of expenses. I am now renting. Also, how do I find a financial adviser who will give me sound advice at my age?

D.K., via e-mail

A: Dana Levit, a fee-only financial planner in Newton, Mass., says that she leans toward keeping the $50,000 safe because it sounds as if you can't afford to lose principal. Further, your time horizon may not be extremely long if you're already close to retirement.

So, what would Ms. Levit define as safe?

"I would likely advise you to ladder two CDs – one for six months and the other for a year," she says. You can roll over the CDs as they come due if you don't need the cash at that point. This way at least $25,000 will be available every six months.

As to finding some advice, there are several routes. You can search for a fee-only financial adviser at, the website of the National Association of Personal Financial Advisors. And fee-based as well as commissioned planners can be found at the website for the Financial Planning Association (

Q: I am considering investing in municipal bond mutual funds. What is the best way to know which ones to buy? Should I only buy bonds from states with a budget surplus, like Texas, Louisiana, Idaho, and Indiana?


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