Adding Pizazz.

You've created a diversified portfolio and built up your retirement accounts. Now, with a fresh $5,000, you have the flexibility to do all sorts of fine-tuning. Ask yourself these questions:

1. Are you over 50? As you get within a decade of retirement and your priorities shift from building your wealth to making it last, income investments become more important. They lower your risk and can be a steady source of cash later. Bonds are the obvious way to add income. But you can get about as much income today, especially after taxes, by buying high-dividend stocks. See "Income, No Bonds" at right.
2. Are you in the 25% tax bracket or higher? Bonds boost your income and lower your risk, but you have to pay a full load of taxes on them. You may do better in municipals. See "Income, No Taxes" at right.
3. Are you willing to devote more time to your investments? Lots of investors reach their goals using funds alone, but buying individual blue-chip stocks can cost you less in fees and taxes. Just make sure you have the time and inclination to research and track them, as well as the fortitude to ride out short-term losses. For the names of eight stocks that look especially timely now, see "Build Wealth" below.
4. Do you worry about oil prices, inflation or recession? With less time before you tap your savings, it's tougher to recover from a big loss. A diversified portfolio should protect you against a sudden shock. But adding certain stocks or funds can fortify you even more against specific threats. See "Disaster Defense" at right.
5. Do you plan to leave money to your kids? As long as you don't need another $5,000, consider giving money to the kids now so you can have the pleasure of watching it be put to work. Or play. See "Out of the Box" at right.

Give It Away

You can pass on $11,000 a year to anyone ($22,000 if you're married) without incurring a gift tax. If you give your children money now, you get to see them enjoy it.

Inflation

BEST $5K CHOICE: T. Rowe Price New Era (PRNEX)

Consumer prices have risen 3.6% over the past year, and many analysts think they are headed a lot higher. Even 4% inflation makes it harder to save enough for retirement. You can offset that risk by buying New Era (800-638-5660), which owns natural resources and energy stocks.

Oil Shocks

BEST $5K CHOICE: Anadarko Petroleum (APC)

Demand for oil is soaring in China and India. That alone could mean much higher energy prices, which could depress the economy. You can hedge by buying Anadarko. One advantage is that 85% of its reserves are in North America, which means that, unlike companies with wells in the Middle East, it can't be hurt badly by foreign unrest.

Recession

BEST $5K CHOICE: Vanguard Long-Term Treasury Investor (VUSTX)

The first thing new Federal Reserve chairman Ben Bernanke did was hike rates to forestall inflation. Trouble is, if he raises interest rates too much, he could tip the economy into recession. If you worry you can't ride out such slumps, put part of your money in a long-term bond fund like Vanguard Long-Term Treasury Investor (800-851-4999). Its value will rise when rates fall during a slowdown.

WHY REAL ESTATE

• It's easy to get your kids to visit if your house is on the beach.

• You can deduct mortgage interest and property taxes, just as with your first home.

• There's an indescribable satisfaction to owning, not just visiting.

WHY STOCKS

• If you pay cash for the home, you'll be left with a smaller pool to live off of. Borrowing adds to your expenses.

• Though beachfront prices have zoomed, you can't bank on more of the same. You're kidding yourself if you think this is just another retirement investment. "There could be 10 years of no appreciation," says financial planner Richard Schultz.

• It's easier to draw income from stocks.