Q. My wife and I have over $300,000 spread over five Janus and Strong mutual funds. We know you have recommended getting out of the funds involved in the recent fund timing scandals. We also know you seem to like the Vanguard family of funds.

We are close to moving from Janus and Strong to Vanguard. Before we do, however, we would like to get your opinion on investing most of one's assets in one fund family. Isn't that a bit risky? If you think it is, what one or two other fund families do you like?

---R.S.G., by e-mail


A. If all your money is in tax-deferred accounts or in funds with little or nothing in unrealized capital gains, feel free to move. Otherwise, check the tax cost of moving first--- don't cut off your nose to spite your face.

You'll find positive references to Vanguard in this column for three big reasons:

First, it is a low-cost fund company. Expenses are materially lower than other fund companies. This means there is more working for the shareholder.

Second, loads don't burden its funds. That saves more money for people who make decisions for themselves.

Finally, Vanguard is the prime mover in index investing, the best tool yet for avoiding expensive "bets" on managers.

My admiration for Vanguard is not unqualified. Low expenses and no sales commissions have not saved shareholders in Vanguard Dividend Growth fund from performances in the bottom ten percent of their peer group over the last five and ten years. Ditto shareholders in Vanguard U.S. Growth. Small Cap Index fund has been a disappointment, as well--- two-thirds of all small cap funds did better over the last ten years.

"Having all your eggs in one basket" is not a major risk. For one thing, mutual fund assets are held in separate trust accounts. The assets are not vulnerable to anything that happens to the mother company. There can be confusion and uncertainty about management, but the assets don't disappear.   You can also have all of your money at one fund firm but hold assets in funds from other firms by using the discount brokerage accounts at most fund firms.

Among the no-load fund firms Fidelity remains a good choice for well-managed funds operated at somewhat below average expense. Ditto T. Rowe Price and American Century among the large firms and Dodge and Cox among the smaller firms.


Q. Would you publish guidelines for people who are considering the purchase of long term care insurance? When is it a wise investment? If I am going to retire with a home that is paid for, Social Security as my only life income, and ten times my final salary in the bank (about $600,000), should I be considering this insurance?

---P.A., by e-mail from Houston, TX


A. The conventional wisdom recommends a triage. People with limited assets can't afford long-term care insurance. People with significant wealth should self-insure. People in between--- like you--- should buy a carefully considered policy.

For the Burns family I've tried to convince myself that a policy would be a good thing, simply because it would allow more early gifting to children and charities. If you know the risk of care expenses will be covered by insurance, you don't have to "hoard" as much money. You can actively distribute more of your estate earlier.

The problem, however, is trust. The December issue of Consumer Reports examined the same question and concluded that most policies weren't worth the risk. This report should be "required reading" for people thinking about LTC insurance.

Basically, Consumer Reports concluded that LTC policies weren't ready for prime time. The risk of rising premiums was too great. Exposure to inflation rate limits could become a problem. And few offering companies had finances that deserved our trust.   Remember, if you are in your early sixties, you probably won't use the policy (if at all) for at least 20 years.

Do you personally believe that the management of any company in America will fulfill its commitments (rather than fill its pockets) over the next twenty years? The recent record isn't encouraging.