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My wife and I are in our late 50s, so we certainly do not want to be 100 percent in stock funds.

Our 401(k)s do not allow us to purchase individual bonds that we can hold to maturity, and the money-market option pays next to nothing. What is a person to do?

Sadly, there are no “good old days” options anywhere. All we can do is look for the best safe offer available.

Right now that appears to be in CD-like annuity contracts. The highest yield among these can produce a good deal more than the highest-yielding certificates of deposit.

The “Mr. Annuity” site, for instance, currently lists a three-year CD-like annuity guaranteed to yield 2.25 percent and a five-year contract guaranteed to yield 3.05 percent.

Both contracts require a minimum investment of $10,000. The highest yield CDs on at the same time was 1.2 percent for three years and 1.31 for five years.

Filet mignon will still be off your shopping list at those yields, but 2 percent to 3 percent is far better than what we can earn with the banks that were prime movers in creating the financial crisis.

Q: When I retired last year from Mary Kay, I moved about $170,000 to a Schwab rollover IRA because of the incentive Schwab offered.

I would like to know how I should invest it.

I am 71 and my husband is 73.

We have a combined Social Security income of $2,800 a month.

We also have around $70,000 in three other investments.

The money has been sitting at Schwab for a year in a money-market account making virtually nothing. I am thinking of laddering it into CDs just to keep peace with my husband.

The longer you hold an investment with risk, the greater the probability you will make money rather than lose it.

On an annual basis, for instance, you will lose money invested in stocks in about 28 percent of the single years you invest.

But when you hold a broad domestic stock index fund for 10 years, the chance of losing money goes down to only 3 percent.

Hold for 20 years and the chance is zero.

So what we all need is a big “bumper” of limited-risk assets in front of our risk assets — something we can sell in a down year if we need to raise cash for any purpose.

The question for your husband is how large a bumper does he need?

If he can’t stand the idea of ever losing money, you could devote 100 percent of your money to building that CD ladder.

But you could also build a shorter ladder, say six years, and put the remaining 40 percent of your money in a broad, low-cost index ETF such as Schwab Multi-Cap Core (ticker: SCHB) or Schwab U.S. Dividend Equity (ticker: SCHD).

These ETFs are commission-free and have annual expenses of 0.04 percent and 0.07 percent, respectively.


Copyright, 2013,

Universal Press Syndicate