How to generate more income?
.floatimg-left-hort { float:left; } .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 12px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 12px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 12px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;}
Dear Mr. Berko:
My husband and I are 77. We both had jobs for 40 years, raised four children and lived frugally; our home is paid for, and we managed to save $285,000 in two individual retirement accounts (IRAs), which are now worth $223,000 after the market collapse. This money is now in certificates of deposit (CDs) earning 1.75 percent, and we need more income. Together, we get $21,000 from Social Security after health insurance payments, plus $4,300 from our IRA CDs. We really need a new car, our air conditioning and heating system must be replaced, and we have the same kitchen and bathrooms that we had when we bought the house new 37 years ago.
After raising four kids, our home needs an overhaul. We need more money (about $1,200 a month) to put our house in order (we are able to do a lot of the work) so our remaining years will be more comfortable. Because interest rates are so low, we asked a broker about improving the yield on our CDs, and he recommended a private real estate partnership in Section 8 housing that would pay us 16 percent.
He recommended that we invest $200,000, which would give us $32,000 in annual income, and my husband is chomping at the bit to invest, because our worries would be over. I think this is very speculative, but the adviser says that it is FHA-insured, and we can’t lose. It scares me, and I don’t want to do it. My husband said an alternative is to write and ask you to recommend a high-yield stock, and if it looks good, he’ll follow your recommendation. If you don’t recommend a stock, he will invest in the Section 8 thing. The kids are no help. Please help as soon as you can.
M.M., Cleveland
Dear M.M.:
Oh, wow! If that adviser who glommed onto you doesn’t mutate soon, his investors are going to be “crying all night, ’cause everything’s wrong and nothing is right” and you’ll be singing the blues. And I’ll wager Charlie Rangel’s $456,000 Bentley convertible to a lovely bunch of coconuts that this Section 8 investment is pure puffery and taradiddle. The Financial Industry Regulatory Authority should sentence this scrofulous adviser guy to a glossectomy without anesthesia to protect future mooks.
You’ve got four choices.
(1) Have a “come to Jesus” meeting with all the kids in one room. Lay it out and give them a guilt trip. If you need help, call the JMGTAL, or the Jewish Mothers Guilt Trip Advisory Line. Tell the kids you filled your responsibility for 22 years, and now it’s time for them to fulfill their responsibility to you. Tell them you need $300 per month from each household or tell them to buy you a new or used car and modernize your home.
(2) Consider a reverse annuity mortgage, which should pay you about $900 a month tax-free or give you a lump sum (perhaps $85,000) with which you can renovate, purchase a new car and still have a bunch of bucks remaining.
(3) You can consider a combination of three real estate investment trusts (REITs): MFA Financial Inc. (MFA-$7.28), paying 96 cents per share and yielding 13.2 percent; New York Mortgage Trust Inc. (NYMT-$7.64), paying $1 per share and yielding 13.1 percent; and Walter Investment Management Corp. (WAC-$16.11), paying $2 per share and yielding 12.4 percent. These ominous issues sail and navigate extremely rough waters. Each owns a portfolio of Tricky Dicky, Slippery Sam and Lousy Larry adjustable-rate, residential, apartment, multifamily mortgages, the values of which have nearly foundered.
Still, there’s a glimmer of life in each issue, because their portfolios, which contain many of the best of the worst, have bounced off the ocean bottom and may be headed back up for fresh air.
As a last resort — and only as a last resort — invest $25,000 in each of the three REITs. Meanwhile, other readers who can afford the obscene risks might consider owning a sample of each in the “hellfire and brimstone” section of their portfolio.
And (4) consider a combination of a reverse annuity mortgage, money from your kids and a smaller investment in the three explosively risky REITs. And at your “come to Jesus” meeting, don’t discuss the other alternatives with your kids. If they come across with the money, I’d still recommend a reverse annuity mortgage and tell you both to blow the new money on unimportant, unnecessary and silly “feel good” toys. You guys deserve it and more.
Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, Fla. 33775 or e-mail him at mjberko@yahoo.com. © 2010 Creators.Com
Trending News
