"Income fund" question for a 70 yr old Fidelity account holder....?

Question

My mother is 70 and has a solid income stream (pension, SS, annuity) of about $30,000 .... she also has about $70,000 in Fidelity non-IRA mutual funds. It is almost ALL in stocks. I think that is way too risky for someone her age.

I'd like to suggest to her a fund that will produce income with relatively low risk. I am looking at the Fidelity Freedom Income Fund as an option for her... any opinions?

Answer 1

Fidelity Freedom Income Fund would NOT be a good choice. According to Fidelity's website, this fund is ranked #91 out of 111 (bottom 25%) by Lipper and is a 3-star fund according to Morningstar. Additionally, the fund only has a dividend yield of about 1.5%, which is ridiculously low for an income fund.

I would recommend the American Funds Income Fund of America, which has a dividend yield of over 3.5% and has shown consistent long-term investment results, especially during weak markets. I just think that if you are going to get an income fund, it should pay out some income. Additionally, I think the stock has had only 1 or 2 down years since 1986.

Answer 2

It sounds that her mutual funds are doing okay to me, why get her to move it? You can usually translate income or low risk to low profit and low return. Mutual funds are diversified by the nature of the fact that they buy into a variety of stocks. As long as her Mutual Fund is not a high risk fund, her investment is pretty safe. Since she is 70 she needs to think about getting that money out and start enjoying it, but that is up to her too...

Answer 3

There is such as a thing as too low of an investment. For instance, in California the inflation rate is just over 5%. Most safe bonds are under 5%. Then you have to factor in taxes. In the end, most safe bonds are too much of a risk of under investing in California.

The only investments making a real profit right now are stocks and commodities.

Answer 4

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