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The fees in funds


I am 70 years old and over funded in my IRA. I’m still working and have no need to touch my investments. Nevertheless, I am required to withdraw about $250,000 (minimum) this year. I believe I would do best in a tax-free mutual bond fund since the cost of buying such a small amount of bonds would be higher than if I were buying them in a fund. Am I correct?

S.M., New York


James A. Klotz responds:

Actually, it’s just the opposite.

Most load funds have a sales charge of at least 4%. No-load funds charge ongoing management fees, which take their toll year after year.

We are also troubled by the fact that bond funds have no specific maturity date. This can make them more volatile than individual bonds.

Additionally, with $250,000 to invest, you should be able to do much better on all counts.

Jan 3, 2005

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