Smart Money: Age can be major variable in investment strategies

Bruce Williams is a national radio talk show host and syndicated columnist

Dear Bruce: I had invested $5,000 in a technology fund, now worth about $1,300. I wonder if I should pull out and take the losses on this year's taxes. On the other hand, the current tech market may be a buying opportunity and I should build the fund back up, even though it may not go anywhere for several years. What are your thoughts? R. C., Huntington, Calif.

Dear R.C.: You didn't mention your age, which is a major variable. Given the amount of money involved and the type of investments you made, you likely are a relatively young person.

Assuming that the funds you are in are decent stocks, I don't see where bailing out now would be appropriate. While the tech market has been hammered, there still are good technology companies that shouldn't be ignored. But that's a judgment you will have to make for yourself. Understand that you could lose as well.

Dear Bruce: I am single, 65 years old and self-employed. In July 2005, my government bonds will mature to a value of $420,000. How can I invest this money and live off the income so I can retire? I can live on $2,000 a month over my Social Security income. S.G.

Dear S.G.: You didn't tell me what your bonds are currently earning, but if you reinvest the money until retirement, you should have about $460,000. No one knows what interest rates will be in three years, but it's likely they will not be much lower than now. If that is correct, there will be corporate bonds available that will pay about 6 percent, which would give you more than the $24,000 a year that you need to retire.

Don't try to make this decision now, since so many variables can change. If everything remains relatively constant, I think you are in good shape. However, there will always be risk in a corporate bond. I think if you share your needs with a competent investment broker, these types of bonds will be readily available.

Dear Bruce: My wife ran up about $24,000 on five credit cards. Would it be better to go to a credit-card counseling service and let them work out the payments or to a mortgage company and get a home-equity loan? She is paying more than 20 percent interest, plus late and over-limit fees. We owe nothing on the house, but my credit rating is bad. J.D., Kentucky

Dear J.D.: I wish I had an easy answer for you, but I don't. You might enlist the services of the Consumer Credit Counseling Service, who can strike a deal with the credit card company to lower or suspend interest payments.

Borrowing against the house is simply "robbing Peter to pay Paul." With a poor credit rating, this possibility may not be available to you. Given the fact that you both have bad credit and she has a spending disease, credit-card counseling should be at least the first step it may not be the final one. You need to get credit cards away from your wife to make sure she doesn't exacerbate the situation.

Dear Bruce: I owe $9,000 on a 1993 automobile. The Blue Book value is $6,700. Recently the timing belt broke and caused $5,000 damage to the engine. I can't decide whether to repair the car or take a loss and get rid of it. What suggestions can you make? T.B., Honolulu, Hawaii

Dear T.B.: You're already "upside down" to the tune of $2,300 if the engine were in good shape. Adding $5,000 now makes you $7,300 upside down. The problem is, if you junk this car, it is worth virtually nothing, and you'll still owe $9,000.

I think your best shot is to bite the bullet and have the car repaired.