Dear Mr. Berko:

I am 71 years old and retired 11 years ago with a $694,000 rollover individual retirement account, which is now worth $516,000. My wife and I have been taking $1,000 a month from this account to supplement our Social Security and two pensions. Though the market has gone up a lot, we stopped taking money from this account five months ago because it has not kept up with the income we need. For 10 years, we had four different brokers, who bought and sold 67 different stocks. They bought stocks I didn’t like, and none seemed to know what he was doing. Their advice was awful, and for the past year, I’ve managed my own account. However, I have done no better than the brokers before me.
     
I should have listened to you when I retired in 2002 and put all that money in a dozen good utility stocks. Today my account is more than 70 percent cash because I’ve been looking for a 10 to 15 percent pullback, but it hasn’t happened. Do you think the market can have a 15 percent pullback? I’m afraid to invest and afraid not to invest, and the newest broker who wants to manage my account (he wants to charge me 2 percent but no commission) believes I should invest 30 percent in real estate investment trusts, 30 percent in energy stocks, 30 percent in undervalued foreign stocks and 10 percent in cash. What do you think? I think 30 percent is too much in each sector and would prefer 25 percent per sector and then 15 percent in health care issues, which should zoom because of Obamacare spending.
     
I need to do something immediately because this stock market just seems to be going up with nothing to stop it. What do you think of penny stocks for a quick profit? Do you think I should buy gold? Would you recommend some good income stocks for me one more time? I’ve talked to another broker about trading and writing options, but that is too complicated. Please answer me quickly. We need to begin taking $1,000 a month from this account as soon as we can because our pensions and Social Security are barely enough. 


L.K., Bethlehem, Pa.



Dear L.K.:

When you retired 11 years ago with $694,000 in an IRA, two pensions and Social Security checks, you had life by the tail. So for your information, I would like to ask you a question: Why didn’t you purchase a dozen or so utility stocks yielding 5 percent back then, which would have earned $35,000 in annual dividends with small increases in most of the following years? That would have been simple as Simon, and you’d be in high cotton today. However, no matter how simple things can be, there are some folks, like you, who seem to enjoy making simple things complicated. And no matter how I respond to your questions about energy stocks, foreign stocks, REITs, health care issues, penny stocks and options, I suspect you will find fault with my answers as you did nearly a dozen years ago. But I’ll try again.
     
Stay away from penny stocks. Forget about gold. Keep your distance from the option market. Tell the new broker his 2 percent fee is enormously high, and don’t talk to him again. Then, starting tomorrow, give yourself a raise and begin taking $1,500 every month from your IRA.
     
Yes, I think the market will have a continuing pullback that will take it even lower, but I don’t know how much lower. And frankly, I don’t give a hoot, because if you invest $50,000 in Kinder Morgan, AT&T, PPL Corp., Total SA, Energy Transfer Partners, Mercury General, TECO Energy, W.P. Carey and Old Republic, that’ll pay you handsomely, even if the Dow Jones industrial average falls below 10,000. This portfolio yields 5.9 percent, and the dividend income is likely to increase a satisfying bit every year. Then invest the remaining $94,000 in Virtus Senior Floating Rate Fund, which offers a 5.31 percent current yield. This portfolio should keep you well for the rest of your life.