Year end mutual fund financial tips

- Alan Lavine and Gail Liberman

• Your financial condition has changed. Do you expect more expenses? If so, start building up your cash reserves, or take some profits in risky stock funds. You don't want to be in a position in which you're forced to sell investments at a loss. Nearing retirement? If so, consider keeping more in bonds and cash and less in stocks.

• You've racked up big profits in stocks, bond and real estate funds or other investments. In this case, it's often a good idea to rebalance your holdings. In other words, take profits from one investment and deposit them in underperforming investments, or beaten-down stocks with good potential.

• Rising inflation and interest rates. Cash is king when inflation is on the rise. Reason: Short-term interest rates typically shoot up along with inflation. So it's a good idea to stick new money in short-term CDs and money market accounts. That way, you can roll your money over at higher rates.

• Make certain that the investments you expect to get clobbered with the highest taxes, such as bond funds, are in tax-free accounts, like Roth IRAs, and vice versa.

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Spouses Gail Liberman and Alan Lavine are syndicated columnists. Their latest book is "Rags to Retirement (Alpha Books)." You can e-mail them at MWliblav@aol.com.