Q. I am a retired teacher. I want to put my money into something that will give me a monthly return, but is also safe. I invested a lot of money in the stock market and lost almost all of it, so I do not want to get back into the stock market at all.

Currently, I have about $150,000 in the Smith Barney Managed Muni Bond fund. This is paying me about $450 a month, tax-free. I am planning to add to this until my monthly payment gets closer to $1,000. What I need to know is--- Is this safe? I don't trust my account manager--- he keeps trying to talk me back into the stock market. If I keep my money in the Muni Bond Fund, will it continue to pay me this amount? Or, when interest rates rise, will my monthly payments be less? Is there any way I could lose this money like the money I lost in the stock market?

---J.I., by e-mail from San Antonio

  

A. First things first: If you are retired and truly lost "almost all" of your stock market investment under the advice of your current broker, I suggest that you change brokers. While virtually everyone has lost some money in the last two years, if your stocks declined more than 50 percent you weren't getting very good advice.

If you are in the "A" shares of Smith Barney Managed Muni Bond--- the ones where you pay an up-front commission when you buy--- then you've got a fund with a splendid track record. According to Morningstar, the Chicago mutual fund data firm, this fund has been in the top half of all comparable funds over all time periods. It has been in the top ten percent over the preceding 10 and 15 years. That said, it lost money in 1994 and 1999. You will lose less money in a bond fund than in a stock fund but it is still possible to lose money.

If interest rates rise, the value of your investment will fall. Your income should be stable, however, since you'll still own the same bond portfolio. What worries me about your letter is that most retired teachers don't need tax-free income. Their retirement income is low enough that they aren't in a high tax bracket. This year, for instance, a single taxpayer can have a gross income of $35,650 and still be in the 15 percent tax bracket.   The next $100 puts the taxpayer in the 27 percent tax bracket.

I suggest a visit with the person who completes your tax return. Ask what your tax bracket is. If its 15 percent, consider switching to a taxable bond fund. You'll pay some income taxes but you'll have more income to spend.

  

Q. I was wondering if you ever plan to publish a Couch Potato Index on a regular basis that shows the relative performance of the Couch Potato portfolio vs. the Dow Jones Industrial Average, the S&P 500, the NASDAQ, etc. I believe it would be very interesting to see annual and YTD comparisons with the other indices.

---P.S., by e-mail

  

A. I write an annual column comparing the performance of the two Couch Potato portfolios against a number of benchmarks and ranking them against managed funds. That seems about the right pace for a true Couch Potato investor. Remember, our true goal is to achieve Nirvana by not thinking about investing and repeating the magic word of the Southwest.

Say it slowly, then repeat: Margarita.

Recidivist active investors can get a quick proxy for the Couch Potato Portfolios by visiting the Morningstar website, www.morningstar.com, clicking on "funds" and entering the ticker symbol for Vanguard Balanced Index fund, VBINX, to see their full report. Then go back to the "funds" page. Click on "category averages" and see how the fund has done against other asset categories.

  

Q. Would now be the time to put money in a long-term fund package? We are both 30 years old and would like to start our retirement saving. A broker told us if we would invest in Fidelity Destiny I over 10 or 15 years this would be the right time. What do you think?

---D.T., by e-mail

  

A. Fidelity Destiny I is one of the last installment sale mutual funds. It allows you to make regular small investments but commits you to a ten-year period and has a sales charge high enough to give you a nosebleed.   Today, you can accomplish the same goal--- regular, disciplined investing--- simply by setting up an automatic bank draft and having regular amounts invested in a no-load fund in a taxable account. At T. Rowe Price funds, for instance, you can make regular $50 investments with no load and no contractual obligation.