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Dear Mr. Berko:

Dear N.E.:

No, no and 1,000 times no. Do not invest a nickel, dime or dollar in Advanta’s six-month, 8 percent Investment Notes. Advanta Corp. (ADVNA-61 cents) is a financial services company providing consumers and small businesses with mortgages, business credit cards, equipment leases, insurance and securitization services. I don’t know much about ADVNA for three reasons:

1. I can’t find an analyst who follows ADVNA.

2. My few contacts at various brokerage research departments have no interest in the company.

3. None of the dozen investment services to which I subscribe think ADVNA is worth looking at.

So it’s easy for me to say, “Do not buy those notes.” This company is in a difficult business, and my Google searches have all failed to provide me with an income statement or balance sheet. When a company that trades at 61 cents a share tries that hard to keep its financials hidden, there must be a good reason. Although an 8 percent return for six months is excellent, the possibility that ADVNA might not be able to keep its promise to you in six months is also excellent.

You might consider the no-load Vanguard Short-Term Bond Index Fund (VBISX-$10.31), which has not had a losing year since it went public in March 1994. VBISX tracks the performance of a market-weighted bond index with a short-term, dollar-weighted average maturity of not more than three years. It has more than $4 billion in assets under management, was plus 5.4 percent in 2008 and has a good 3.48 percent current yield.

VBISX’s total expense ratio is 0.19 percent, there’s no annoying 12b-1 fee to smother the yield and it has a solid five-star rating. And because VBISX’s maturities do not exceed three years, there’s little risk to your principal, and there’s no penalty or cost when you need to sell shares. About 75 percent of the portfolio is triple-A rated (including U.S. Treasury bonds), 5 percent is double-A, 12 percent is A rated, while 8 percent is triple-B rated.

For an unexciting investment, VBISX has an attractive performance record. Its worst one-year total return (includes dividends and interest) was a plus 1.31 percent in 1995. And its worst three-year return, 2003 to 2005, was a plus 2.12 percent including dividends/interest. However, its best one-year total return of 12.8 percent was in 1995, and its best three-year total return, 1995 to 1997, was 8.10 percent. In the past five years, VBISX posted a 3.69 percent average return. I’m comfortable recommending that you invest half of your CD money in this short-term Vanguard fund. The minimum investment is $3,000.

I bought VBISX in June 2002 at $10.17 a share and received a 4.7 percent current return. The yield now is much lower, but my share value is a bit higher. I’ve reinvested the dividends every month, and my investment has increased in value by 35.6 percent in seven years. That’s one heck of a lot better than most stock mutual funds have done in the same time frame.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net. © Copley News Service