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How to get income from your funds

- Alan Lavine and Gail Liberman

Looking for an all-in-one place to get income?

The Thrivent Diversified Income Plus Fund is a new mutual fund that pays income from different types of investments.

The fund invests in high-yield bonds, dividend-paying stocks, Real Estate Investment Trusts (REITs), stocks and investment-grade bonds, rated A to AAA by Standard & Poor's.

The fund, managed by Mark Simenstad, is a wholly-owned subsidiary of Thrivent Financial for Lutherans, Minneapolis. It determines what type of investment is best, based on the current economic outlook.

"The fund is a simple solution, but backed by a sophisticated approach," Simenstad said. "It's actively monitored and adjusted as needed based on changing market conditions to optimize the opportunity for growth."

This fund is not risk-free. Its investments fluctuate based on the direction of interest rates. If rates rise, the fund's share price likely will decline. How much depends on the fund manager's ability to pick the right investments and diversify among income investments.

Bonds and utility stocks are sensitive to changes in interest rates.

Bonds and bank CDs are hurt by rising inflation. The reason: The income from these investments is fixed, but prices are on the rise. So you lose purchasing power.

This fund, he says, invests in stocks and real estate. Over the long term, these typically increase in value more than the inflation rate.

Don't want to invest in a new fund without a track record?

Why not set up your own income portfolio? You can do this by investing in money market mutual funds, short-term bonds, CDs, income-producing oil and gas stocks, utility stocks, real estate stock funds and precious metals mutual funds.

Gold is an inflation hedge. As inflation heats up, gold typically performs well. Gains in gold should help offset losses in bonds, which decline in price when interest rates rise.

Another option: Look into the lifestyle funds offered by Fidelity Investments, Vanguard Group and T. Rowe Price. Lifestyle funds may invest in a fund group's other types of income funds.


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.

To read more columns, please visit the column archive.

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