AGES 35 TO 55: TURNING CONSERVATIVEAGES 35 TO 55: TURNING CONSERVATIVEYou're in transition: saving for retirement and college costs but beginning to shift to preserving assets. In the recession, be sure to have a cash cushion--in money-market funds money-market fund, type of mutual fund that invests in high-yielding, short-term money-market instruments, such as U.S. government securities, commercial paper, and certificates of deposit. or short-term certificates of deposit--to cover at least one year of living expenses. To boost cash, consider trimming your contributions to retirement accounts. If you are a homeowner, another option for raising cash is a home-equity line of credit, which can still be had for around 5.5%. The interest is tax-deductible. For yields on cash instruments, check out Bankrate.com. Tuition bills on the horizon? If you live in one of 35 states that offer tax deductions Tax deduction An expense that a taxpayer is allowed to deduct from taxable income. tax deduction See deduction. on 529 plans, open one up. Compare plans at Savingforcollege.com. Evaluate your retirement plan against your goals using the "Ballpark E$timate" retirement calculator at Choosetosave.org. Keep your investments geared toward growth--you still have a long investment horizon ahead--but start building an income portfolio with blue-chip stocks, many of which yield 3.1% or more. If you are in a high tax bracket Tax Bracket The rate at which an individual is taxed due to a particular income level. Notes: Each income class is taxed at a different level. Generally, the more you make the more you are taxed. , acquire some municipal bonds with outsize out·size n. 1. An unusual size, especially a very large size. 2. A garment of unusual size. adj. also out·sized Unusually large, weighty, or extensive. yields. If you can stomach risk, consider allocating 5% to high-yield bonds High-yield bond See: Junk bond high-yield bond See junk bond. , which typically yield 8% or more. And begin to diversify into noncorrelated assets, such as market-neutral funds, managed futures Managed Futures In the context of hedge funds, a style of management that focuses on short-term trading in the futures market. , and even commodities, to protect your stock holdings. 
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