Q. My dad is worried about having money in the stock market. He’s 66 and still working, and he doesn’t have enough to retire. How can I convince him?
— Trying to help

A. To make sure your dad’s investments earn enough to help support his future retirement — and keep up with inflation — you’re correct to have concerns.

But without knowing more about your dad, including when he wants to retire, the size of his portfolio, his expected retirement budget and whether he expects other income when he leaves work — such as a pension — it’s impossible to say for sure that he needs the stock market.

If he’s like most investors, though, he will need to take some risk to make sure his money grows.

Taking the “safe route” and leaving money in a bank account earning 1 percent will surely result in loss of principal over time, said Vicky Tomaro, an Investment Advisor Representative with Tomaro Financial Group in Wall.

That would be because of inflation.

Tomaro said there are different types of investments that have growth potential despite the fluctuation in stock value. Some even offer 4.75 to 5 percent annually, she said.

“For example, with a $50,000 investment, a 5 percent return will give you another $200 per month in income,” she said. “Dividends are paid according to the number of shares owned, not the value of the shares. And, you may choose to reinvest dividends to purchase more shares.”

She said there are many income mutual funds that have a good and consistent yield, and of course good stocks that have dividends that increase as the company earns higher profits.

Annuities with living benefits are another option, Tomaro said. These offer growth potential that protects the principal investment as long as you’re not drawing income from it.

You dad might want to meet with a financial advisor who can explain — as an objective observer — what your dad’s needs might be, and offer suggestions on how he can reach his goals with a minimum of risk.

Or, tell him about NJMoneyHelp.com’s free and anonymous money makeovers. We’d be happy to help.

Karin Price Mueller writes the Bamboozled column for The Star-Ledger and she’s the founder of NJMoneyHelp.com. Click here to sign up for the NJMoneyHelp.com weekly e-newsletter. Like NJMoneyHelp.com on Facebook and follow it on Twitter.

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