Financial Fitness Contest
Winner #8 Brenda Wilkinson
Fixed Annuity and put it into her Amex Variable Annuity, which has $550 in it. Why? To take advantage of the growth mutual funds on a tax-deferred basis.
Increase contributions to her stock portfolio. She currently contributes $50 a month to FINOVA, $50 to Merck, $100 to AT&T, and $100 to Home Depot. She should contribute at least $100 a month to each stock (preferably $200), and add Cisco to the mix.
Save up $10,000 in her money market account. Once Wilkinson reaches that goal, she should redirect the money she currently puts into the account, about $300 a month, as follows: $200 toward her IRA account and $100 toward bonds.
Hold on to her real estate properties. She should keep her town house until it increases in value to at least $225,000. In about three to four years, she should be able to net a $50,000 profit from the sale of the property. That money could then be used toward the down payment on a new home.
Consolidate her mutual funds. She should consolidate her mutual funds and contribute $750 a month to her Fidelity Freedom Mutual Fund account. This is where the proceeds for the down payment on the house will come from.
Beef up her retirement savings. Since she plans to retire at age 60, this gives her 26 years in which to invest. She already has about $118,000 saved up for retirement. She needs to systematically put aside $1,930 a month in her retirement funds. Given a 12% return on her investments (the average for the Standard & Poor’s 500-stock index), she should amass $5.9 million by the beginning of her first year in retirement (2026). Since she really only needs to have a retirement income of $7,500 a month ($20,794 in 2026), she will actually have a $1.3 million surplus.