Reinvestment Riddle

How you deal with appreciated bonds should depend on what kind of investor you are.

For Jack Peters of Las Vegas, interest rates can't start rising soon enough. Harvey Silver, who's from New York City, is content if rates stay where they are. Both men are retired and in their mid seventies, and both have done well with the income investments they made in the past. But now Peters's certificates of deposit are coming due, and he wonders how he'll reinvest the proceeds. Meanwhile, Silver worries that his paper gains on corporate bonds are about to evaporate. Both men are antsy -- and with good reason.

Peters thinks electric-utility stocks would make suitable replacements for his CDs. Not a bad idea, says Harry Rady, of Rady Asset Management, in San Diego. Rady says utility stocks, lousy performers over the past year, are inexpensive. With utilities, he adds, you get a reliable stream of dividends while you wait for the stocks to appreciate.