An emerging-market fund can also be a solid performer. These funds can be volatile. As a result, you may want to buy them from only one fund family with access to a money-market account. With this set-up, you can retreat to safety if the market plunges. Currently, one type of investment often overlooked is the convertible-bond category, says Mike Huffman, a financial specialist with Fraser Management Associates, Burlington, Vt.
Convertibles combine elements of stocks and bonds.
Sam Paddison, managing director of First Capital Group, notes that just about all the folks he knows under age 30 have no bond products. For them, equities alone are the way to invest. But that could be a mistake in a downturn, or a slow-growing economy, he says. He also likes corporate bonds graded A or better with maturities of around 10 years. Junk bonds are also attractive, but he believes they currently entail too much risk for average investors.