A quest for guaranteed returns with little money

Q I want to invest in something that would allow interest earnings to stack up for about five years without losing my initial investment. I also don't want to pay any major penalties if I need to withdraw the money before the end of the time period. A friend suggested US Treasury bills. I plan to initially invest about $100. Any suggestions?

J.B., Gatesville, Texas

A To buy a regular US Treasury security, you'll need at least $1,000, says David Bendix, who heads up Bendix Financial Group, Uniondale, N.Y.

If you are still interested, write The Bureau of the Public Debt, Division of Customer Services, Washington, DC 20239. Or visit its Web site (www.publicdebt.treas.gov).

Instead, "you might consider a taxable money-market mutual fund," says Mr. Bendix. Check out different companies to see if they will accept small dollar amounts.

Finally, consider US savings bonds. But there is a three-month interest penalty if you cash out in the first five years. Write to the Bureau of Public Debt, Savings Bond Operations, 200 Third Street, Parkersburg, WV 26106-1328, or find them on the Internet (www.savingsbonds.gov).

Q I'm thinking of opening a savings-checking account with Telebank. It charges low fees, offers good rates, and the accounts are FDIC-insured. How can I check on the safety of this bank and others?

J.M., New York

A To check out the financial safety of a bank, contact Veribanc, a rating service, at 800-442-2657. According to a spokeswoman, for a small fee, "Veribanc will tell you the bank's safety rating."

Incidentally, the bank you mention has a three-star rating, Veribanc's highest.

Q If I leave the company that I now work for to be a freelance consultant, what should I do with my 401(k) plan with my current employer?

C.J., West Orange, N.J.

A Either leave the money in place with your old company, if they allow it, or directly roll it over to an individual retirement account (IRA), financial experts say.

Jane Bryant Quinn, in "Making the Most of Your Money" (Simon & Schuster), suggests you check all the rules with your old employer, such as whether you can access the account if you need to.

For a rollover, have the financial firm holding the IRA handle all the paperwork. If you take possession of the assets, you could be

socked with tax penalties.

Questions about finances? Write: Guy Halverson The Christian Science Monitor 500 Fifth Ave., Suite 1845 New York, NY 10110 E-mail: halversong@csps.com

(c) Copyright 1999. The Christian Science Publishing Society