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.
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