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Investing for income

I am retired, 65; my wife is 62. We both have social security and no children. Our income is about $1,000/month. I would like to invest about $100, 000 for income. What would you suggest? W.N.

Now and possibly for the next few months is one of those opportunities for investing in discounted, interest-sensitive securities. I would suggest putting roughly one-third in deep-discount bonds, another one-third in income stocks, and keep the remaining one-third in a money-market mutual fund for high current yield and liquidity. (See answer to another question in this column for specific funds.)

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Deep-discount bonds are issues of AAA- or AA-rated bonds with outdated coupon yields in the range of 4 1/2 to 6 percent. Currenty yields on discounted prices range up to 10 percent. These should be held until interest rates decline and their price increases -- probably about a year to a year and a half away.

Utility income stocks are paying in the range of 11 to 12 1/2 percent due to their depressed prices.

By parking a portion of your funds in a money-market fund, you can be in position to invest later in something else to diversify your holdings.