What the experts say

Tweak your target fund

More than three quarters of company 401(k) plans now offer “one-stop shopping” in the form of target-date mutual funds that automatically shift the mix of stocks and bonds as you age, said Jane Bryant Quinn in CBSMoneyWatch.com. In theory, investors need only identify the year of their expected retirement and let the fund company worry about managing the fund created for that year. That should work for younger investors, but for older investors, choosing the right target-date fund isn’t “as obvious as it seems.” If you’re in good shape financially and physically, for example, you may be better off in a fund designed for younger savers, meaning it’ll be heavier on stocks. If your situation is more challenging, you might need to avoid risk by opting for a fund designed for savers older than you.

The perils of preferreds

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For income-starved investors, preferred stocks seem like an ideal combination of low risk and hearty yields, said Jason Zweig in The Wall Street Journal. These shares get first dibs on stock dividends, and their yields may be taxed at lower rates than those of bonds. Still, even in the best of times, preferred shares are 10 percent riskier than junk bonds, says Eddie O’Neal, an economist with Securities Litigation & Consulting Group in Fairfax, Va. Unlike bond yields, preferred dividends can be “shut off at will.” Besides, investors generally need to hold the shares for 61 out of 121 days before or after the dividend date to have the income taxed at a lower rate. That standard may be easy to meet with individual shares, but things get “tricky” if you’re investing via mutual funds.

Home equity loans here again

When home equity started drying up a few years ago, home equity loans and lines of credit “all but disappeared,” said AnnaMaria Andriotis in SmartMoney. But now regional banks are tiptoeing back into the second-mortgage market. That’s good news for homeowners who want to take advantage of lower remodeling costs or who need the cash to help cover, say, their kid’s tuition. “This generosity,” unfortunately, is being extended “only to the best borrowers: homeowners with at least a 720 FICO score, at least 20 percent equity in the home, and income verification.”