Wants to invest in emerging markets

Question: I am retired, 57 years old, with a pension revenue of $27,000, which is not sufficient. I have about $62,000 in mutual funds that I put in short term and money market funds since March. I gained a little bit after the huge loss in the technology bubble and wanted to park those gains because I was afraid of a correction. But the market kept going up. Do you think it is too late to embrace some sectors? I am thinking of investing some in emerging markets. What is your opinion on those markets? – G.G.

Gordon’s answer: Good heavens! Where are you getting your financial advice? I hate to say it, but this is a completely misdirected approach.

Stop and think a minute. You are retired and living on a pension that you say is inadequate. So what should your investment objective be? Income, obviously.

Investing in high-risk technology funds was a big mistake but that cannot be undone. With interest rates so low, the money market funds are providing a return that doesn’t even match inflation. Emerging markets? Now you’re venturing back into the same high-risk territory that got you in trouble with technology.

What you should be doinwith that money is looking for a conservatively managed income fund that will generate steady cash flow to supplement your income without putting your capital at undue risk. You should be able to comfortably earn an extra $3,000 or more a year from your money. That would increase your income by more than 10 per cent.

Forget the risky stuff. Go back to basics.

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