Ask Karen Gibbs

Veteran business correspondent Karen Gibbs answers your personal money questions and addresses current topics that affect YOUR finances on a daily basis. Karen is the financial expert in your corner--no question is too basic or too small. Karen boils down the issues simply: here's what you need to know, and here's what you need to do. Send your money questions to and post your comments below.



Getting into the Investment Mix

Karen Gibbs

Karen, what’s the best investment mix for me?  I’m a 62-year old single woman with a 401(k) and some personal savings.

- Courtney, Cecil County

CaluclatorCourtney, conventional wisdom used to be that your portfolio should consist of cash, bonds and stocks, with your stock percentage calculated by subtracting your age from 100.  In your case that would be 38% stocks with the rest of the portfolio divided between cash and bonds.

However, we’re living longer now and, to account for that, we need to invest in assets that will grow, not just protect our principal or generate income.  The new rule of thumb is to subtract your age from 110 or 120 to get to the percentage of stocks.  That would put your stock position to somewhere between 48% and 58%.
But there’s more to investing than return.  At this stage of the game, investors need to consider just how much risk they are willing to assume in exchange for return.  Will you be able to sleep ...

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Trust Funds vs. Trust Accounts

Karen Gibbs

Hi Karen, what is a trust fund or trust account?

- Curious in Columbia

credit cards and budgetingCurious, thanks for your question.  A trust fund or trust account is an account set up by the grantor and managed by a trustee for the benefit of the beneficiary.
Most people think of trust funds as accounts set up by the wealthy to shield their assets from probate or taxes so that their children are well taken care of after one’s death.

A trust can be revocable, also known as a living trust, allows the grantor to control the assets of the trust during the grantor’s lifetime.  If the grantor’s wishes or circumstances change, the grantor can change or dissolve the trust.  Upon death of the grantor, the trust becomes irrevocable.
An irrevocable trust cannot be changed by the grantor once it is established.  The grantor loses control of the assets and cannot change the terms of the agreement once executed.

You can place most any asset into a trust; cash, stocks, bonds, fine ...

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