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Pick brokers' brains to absorb investment knowledge

Berko recommends visiting with several investment advisors before settling on a strategy.
Oklahoman Published: May 4, 2014

Dear Mr. Berko: I am 57, am single and made $62,000 last year as a civilian federal employee. Because of a bad marriage, I haven’t been able to contribute much to my retirement plan, which is worth $86,000. I am tired of the winters in Minnesota and hope to retire in Panama or Costa Rica or Baja California, where my limited funds could go a lot further. I have $21,000 in an emergency savings account, which earns only 1 percent; a $12,000 certificate of deposit paying 2.5 percent, which comes due next month; and six stocks (enclosed) with the dividends reinvested, worth $37,000. I’ll also shortly be getting half of the $103,000 netted from the sale of my parents’ home in Duluth; I have to share the money with my sister.

I’d like to invest this money ($51,500) and about half of my emergency savings account ($10,000) for a better return. What stocks or mutual funds are best for me to own? Is my best option a traditional individual retirement account to reduce my taxes or a Roth IRA, which wouldn’t give me a tax break, or should I invest in both? And because I am limited in the amount I can invest in an IRA, should I also invest in an annuity because there is no tax until the money comes out? And soon, I expect to be at the point where I can afford to invest more than 5 percent of my salary in the government Thrift Savings Plan, so please tell me how much more I should invest.

TS, Rochester, Minn.

Dear TS: Yes, those winters are quite an experience in Minnesota. I’ve backpacked the Kashmiri and Nepali Himalayas above 12,000 feet a dozen times and have only seen one case of frostbite. A few Februaries ago, I spent two nights and three days in Two Harbors — some 45 minutes above Duluth, on the northwestern shore of Lake Superior — and my rental car got frostbite twice in two days. Minnesotans enjoy complaining about the cold weather, and some move to Florida or another place in a warm climate if they can. I know a few Minnesotans who did, but within a season of their leaving Minnesota, they missed the cold weather so much they were eager to return. You folks are a very special breed!

I don’t know enough about you or your risk tolerances to provide you with the advice you need. Nor am I able to sit across a table with you to develop a dialogue to give you the personal counsel you should have to define your goals and reach them. You really must have face-to-face time with an investment professional, but unfortunately, most money managers don’t want to bother with smaller accounts.

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