Dear Mr. Berko:

I’m 55 and my wife, who recently inherited $355,000, is 53. We both work and together earn about $58,000. But we have no savings, no individual retirement account and no work retirement plan. We owe the normal bills, about $17,000 in installment debt, and have a $29,000 mortgage on our small home.

The attorney for the estate suggested we talk to the man whose brochure is enclosed. He was a bank trust officer and is now a private money manager. He sounds smart and qualified and very good at what he does.

But my wife thinks we should investigate more and asked me to write you for your opinion because you gave her ex-husband good advice in 1996 that made money and saved him from losing much more. So please tell me if we should sign up with this man.  He charges 2 percent a year to manage our money plus commission costs when he buys and sells stocks and bonds. We would like you to answer as soon as possible, please.

A.W.  Syracuse, N.Y.

Dear A.W.:   I know the money manager with whom you are talking and I would place him in the top 50 percent of his category. His style is too aggressive for my tastes and, in my opinion, much too aggressive for you. He uses complicated chart patterns to select stocks that are purchased for your portfolio. If a stock does not perform as expected within a short time frame, it is sold and a different issue is purchased for your portfolio.

I believe that investing is a marathon and not a sprint. Your recent $355,000 inheritance gives you an opportunity to manage your retirement rather than let your retirement manage you. Be mindful that this windfall may be your last chance to stay out of the Alpo line when you retire. Therefore, you must not use aggressive investment choices with this money.

So, consider the following investment idea: I like ConAgra Foods Inc. (CAG-$21), which is a $27 billion revenue food producer. I like CAG because it wholesales popular brands, such as Blue Bonnet, County Line, Hunt’s, Armour, Egg Beaters, Gulden’s, Wesson, Knott’s Berry Farm, La Choy, Bumble Bee, Hebrew National, Healthy Choice and Swiss Miss, to name just a few. These products are well-known and sell for less than a few dollars each. Because they are inexpensive products, their purchase is less affected by inflation, recession and the economic cycle than the purchase of a TV set, an automobile, a washer, dryer or living room furniture. Because these products are readily consumable, they consistently generate repeat sales.  I like CAG because revenues and earnings have enjoyed a long record of increases and because management has raised the dividend annually for nearly 21 years.

Now, for example, I would like you to buy 900 shares of CAG, which will cost you $19,000 and represents 5 percent of your $355,000 future portfolio. CAG pays a 99-cent dividend, which is $891 a year or $222 a quarter. If CAG remains at $20 a share and you reinvest the dividend income each quarter, you will own about 945 shares at year’s end. Next year, assume that CAG raised the dividend to $1.06 and the shares trade at $22. By reinvesting all the second-year dividends, you will accumulate 47 more shares and own a total of 992 CAG shares.

Assume that CAG raises its dividend in the third year to $1.11 and the share price is $23. After reinvesting the new dividends, you will accumulate 50 more shares and own a total of 1,042 shares of ConAgra.

If you continue this reinvesting program and assume similar dividend and principal growth for nine more years, you will own approximately 1,800 CAG shares in a dozen years. The share price will only have increased 50 percent, from $20 to $30. But because you now own 1,800 shares, your market value has grown from $18,000 to $54,000. And because in the 13th year the CAG dividend will likely be $2.05, your dividend income will have grown from $891 to $3,690. Select 19 more issues with a similar record of revenue, income and dividend growth and your comfortable retirement should be assured.

This is how I believe your portfolio should be managed. There are many issues the dividends of which have doubled in the past dozen years. You can find most of them among the drug stocks, real estate investment trusts, food processors, oil and gas pipeline issues, banks and insurance companies.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, FL 33429 or visit his Web site at www.berkoradio.com.  (c) Copley News Service  Visit Copley News Service at www.copleynews.com.