Dear Mr. Berko: I’ve enclosed my check for you to review my portfolio. My husband passed away four years ago, and I’m now a 71-year-old widow. A lady friend and I attended an invitation-only lunch for seniors two weeks ago, which was very interesting. The speaker believes that in the coming years, we’re going to have a stock market crash and very high inflation that will last at least through the next two elections.
My daughter and I visited him at his office, and he recommended that I sell our nine stocks and two mutual funds, which my husband bought and have been in our account since he died. The stockbroker said that 20 percent of the proceeds should be invested in a floating-rate mutual fund, which would pay more each time interest rates go up. Then, he said, we should invest 30 percent in an annuity that guarantees against any loss and pays a guaranteed 6 percent. He wants the last 30 percent to go in a private real estate limited partnership that owns new Section 8 apartments. This real estate partnership would protect me against inflation and start paying an 8 percent dividend in three years. He advises that we leave the remaining 20 percent in a money market account.
Both my daughter and I think this makes good sense, and so does our accountant, who has known this broker for years. I’m close to my husband’s sister, who is a pharmacist and smart in business ways. She reads your column in Cleveland and told me to contact you before making any changes.
— T.B., Vancouver
Dear T.B.: Beware of free “educational” lunches; they’re infrequently free and seldom educational. Rather, they’re a salesman’s decoy and an investor’s trap. And because of your profile — a widow with several million dollars and no financial experience — you’re defined as a “whale” (a big catch) by financial advisers.
