(MONEY Magazine) – Q. I'm having a hard time understanding why experts recommend keeping a percentage of a balanced portfolio in cash, especially if the interest rates for money-market funds or Treasuries are so low. Why not invest the cash in bond funds? DEAN LEFFLER MEDFORD, ORE.

A. Although bonds traditionally have been considered safer investments than most equities, fixed-income funds can be risky. For one thing, as interest rates rise, the value of any fixed-income investment in your fund will fall. Also, when companies that issue bonds face financial difficulties (such as an Enron or a WorldCom), those bonds in your fund may be downgraded. Three other reasons why cash is king: Cash investments such as money-market deposit accounts or money-market funds are liquid, they are secure, and they can moderate the volatility of both stocks and bonds. For the highest current rates for these vehicles, see The Numbers (page 159); to read more on bonds and risk, see Fund Watch (page 69).

Q. Is flipping real estate illegal? COLEMAN BEELER FORT DIX, N.J.

A. Regulations have recently been enacted by the Federal Housing Authority (FHA) to prevent the activity known as predatory flipping, which typically occurs in low-income urban centers. (The FHA insures 15% of all mortgages and virtually all mortgages to low-income buyers.)

Predatory flipping occurs when newly purchased run-down houses are appraised at well above fair market value and resold for high profits, sometimes to fictitious or ineligible buyers (persons claiming inflated incomes or fake credit ratings). Although the seller makes a profit, the property is often subject to foreclosure when the buyer can't make the mortgage payments or simply doesn't exist. In that case, insurers like the FHA must cover the bank's losses when it is forced to sell the property.

As of June 2, the FHA no longer provides insurance for houses resold within 90 days of purchase. New FHA rules dictate that only individuals who are named on the official record of ownership, such as a deed or title, can legally sell the property. And any house sold again within 91 days to six months requires a new appraisal.

Q. I've heard that the Soros Quantum Fund returned an average annual rate of 31% over the past 30 years. Can you help me find out more about this fund? JOAN KERR TORRENCE, CALIF.

A. In July 2000, the fund was overhauled and renamed the Quantum Endowment Fund, which is now the flagship private hedge fund managed by Soros Fund Management. However, even before the fund was closed to new investors in January 2002, shares were sold only to non-U.S. institutional investors.

Q. I'm 66 and recently retired, with $300,000 in a 401(k) plus a military pension of $3,000 a month. My wife, 48, earns $87,000 a year. Should I take the $24,000 in my company pension fund as a lump sum and roll it into an IRA or my 401(k), or take an annuity of $122 a month until my death, then for the rest of my wife's life? T.M. WALDORF, MD.

A. From a purely theoretical and a mathematical point of view, the monthly annuity payments of $122 would probably net more money over your and your wife's lifetime. But the temptation to fritter away such small monthly payments is so strong that you're likely to net more money if you roll over the $24,000 into an IRA and invest it wisely.

Q. Do you know of a site that lists stocks according to their beta scores? STUART WILSON LOCATION WITHHELD

A. Beta measures the volatility of stocks and stock funds in relation to a specific benchmark, typically the S&P 500-stock index. At riskgrades.com, you can create a list of stocks and get the beta scores. Better yet, you can measure the risk of your entire portfolio.