The Marcottes have settled down nicely in Birmingham Alabama, they can hardly believe that it is going to be more than two years since they moved. Their financial budgeting is in order, and so are their investments for the most part. What has been difficult though is, that their jobs are becoming increasingly demanding, and so are the kids and their various after-school activities. Luz, has had to drop out of the investment club, since she is hard pressed for time, and Martin has not been able to keep up with his stock research as much as he would like to. They are glad that some time ago, they balanced their portfolio by adding bonds, which has given them a steady stream of income, which will come in handy next year, as Joel starts attending a private school. Luz and Martin have made an appointment with a financial planner, who can take an overview of their planning thus far, and possibly advise some mutual funds to round out their portfolio. For the first time Martins employer is also starting to offer several quality mutual funds which can be funded with his 401k plans. The Marcottes feel a little skeptical about mutual funds since they feel they will now have to pay commissions for stock selection, which they can do just as well as anybody else, if they had enough time to research individual stocks.

1. Knowing what you know about the Marcottes by now (their reasons for investing and their conservative nature), what type of fund(s) would you suggest for them? Why?

2.The Marcottes are not sure if they understand how taxes can complicate owning mutual funds. Can you explain?

3. What are the withdrawal options for the Marcottes, should they decide they would like to start investing in individual stocks at a later date