Dear Dave,

My wife and I are in our early 70s, and we’re retired. We have about $136,000 in corporate bonds and $200,000 in mutual funds. Considering our age, should we move the investments into a CD?

Kurt

Dear Kurt,

There’s always a chance you’ll lose money if you leave it in mutual funds and bonds. That’s the nature of the market. But there’s another kind of risk based on what you’re proposing, and that’s risk of value due to inflation.

Assuming you two are in good health, you could expect to live another 10 to 20 years. Most current CD rates are less than 1 percent. Even if they rise to 2 or 3 percent in the future, do you really want to see that kind of return when inflation is likely to rise 4 percent annually? That’s in itself a type of risk, so I would urge you to keep that in mind.

No, I wouldn’t advise moving all of your money to CDs. If I were in your shoes, I’d live off the income generated by my mutual fund investments. As for the corporate bonds, I’m not a big fan of those. They entail almost as much risk as mutual funds without the good returns (on average) over a long period of time.

If you’re concerned about stability, I’m okay with you taking a little money from your bonds and putting it into a CD right now. But I wouldn’t touch the mutual funds.

—Dave