Dear Mr. Berko:

I’m a 55-year-old certified public accountant who entered the market in late 1997 with $326,000. By January 2000, my portfolio was worth $902,000. Then I got hammered during the past three years.

During the last week of February, I couldn’t take the pain any longer and had our broker liquidate my account. I now have $397,000 (we took $82,000 to buy a home) and have lost $505,000 in value. I don’t know what to do or how to invest this money.

Recently, Warren Buffett told various financial news services that he has very low expectations for the stock market over the next 10 years. Last year, Peter Lynch suggested that the best we could expect from equities over the coming decade would be a 5 percent to 7 percent annual return. Other analysts have expressed similar and even more pessimistic opinions.

At my age, I can’t afford to make any mistakes in my investment plans. I know that I can put this money in bonds and get 6 percent, but if interest rates rise, and I believe they will, the value of those bonds will fall. I’m afraid to buy utility issues because many of them have reduced their dividends and the prices have also fallen. I’m not comfortable with the yields on real estate investment trusts because there’s so much talk about a real estate bubble.

If you have any investment suggestions, I would appreciate hearing about them.

B.C., Oklahoma City

Dear B.C.:

Ouch! But you haven’t done poorly. You entered the market in 1997 with an investment of $326,000 and cashed out for $397,000 plus the $82,000 you took to buy a house. So you are quite nicely profitable to the tune of $153,000. That’s a 47 percent return in five years or an annual return of 8 percent.

The following answer may not be easy reading, but it’s the best solution for vanquished investors in an uncertain market. If you’re shaking in your shadows, losing sleep at night and your tummy does flip-flops when the Dow slips 100 points, the following will put a confident smile on your face. It guarantees you an attractive immediate or future income plus market appreciation potential with no risks.

At your age, your investment posture should not assume any risk. I suggest that you consider a variable annuity with a 6 percent living benefit. If you invest $397,000, the variable annuity will pay you a 5 percent signing bonus ($19,850), letting your new investment begin with $416,850.

For illustration purposes, you will have two accounts: a guaranteed account that compounds every year at 6 percent until age 85 and a mutual fund account in which you and your broker will select a variety of mutual funds.

You have at least four choices in the guaranteed account. You can elect to take a 6 percent income (of $416,850) or $25,000 straight away. Alternatively, you could allow the account to compound for six years, 10 years, 17 years or even 21 years. You can stop compounding anytime and take income.

In 10 years, the account is guaranteed to be worth $746,000. The insurer will send you yearly checks for $44,790. If you compound another five years, you’ll get $60,000 annually.

In the 10th year (depending on your age and the interest rates on Treasury securities), you can elect to have the insurer send you a check for $448,000. Because $397,000 of that is considered a return of principal, your tax liability is based on $51,000. Meanwhile, the guaranteed account still has a whopping value of $298,000. These are the worst-case scenarios.

If the selections in your mutual fund account average 9 percent annually over the coming 10 years, your mutual fund account would grow to $986,000. In 14 years at 9 percent, it would be worth $1.4 million, and in 17 years, its value would be $1.8 million.

You’ve got a bunch of choices. You can cash out all or part of the value, continue to let it grow, annuitize part or all of it, or any combination of the above.

There are more moving parts and benefits that make this concept an ideal investment for investors who want a guaranteed return without risks. Ask your broker for a prospectus. It will provide you with answers to other questions you may have.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or visit his Web site at www.berkoradio.com.