Dear Mr. Berko:
Our 20-year-old son will finish high school this December when he completes his online courses. He broke his arm playing varsity football three years ago and can't qualify for a football scholarship. He is a fair student, with minor problems in reading and math, and had to repeat several courses. He needs a challenge. His counselor and we think the University of Central Florida would give him this challenge. Our problem is the money. We have $105,000 in our individual retirement accounts. I have $43,000 in my 401(k), and my wife has $51,000 in her 401(k). I've enclosed all of the investments in those plans for your opinion. We need to raise $30,000, so please tell us what stocks or funds to sell. Or should our son take out a student loan if we co-sign? What's the best way?
-DS, Tampa, Fla.
Dear DS:
Two years ago, Bill Gates gave your county's school system a $100 million grant to improve teaching skills and student test scores. What an abominable failure-and it's nationwide! Florida's K-12 schools are called failure factories.
You don't have a "best way." UCF, at best, has barely modest academic credentials, so anyone with tuition money is admitted to its 62,000-person student body. And if students lack the tuition, financial counselors are there to help them borrow all the money they need. Our school systems have morphed into huge multilevel conglomerates that excel in "assembly line learning." Though UCF lacks the faculty to cuddle your kid or teach him elementary math or how to read, he'd get a degree because grade inflation is rampant. But giving tuition money to the kid from your retirement cookie jar would be the equivalent of tossing it in the toilet. You'd never get it back-neither in cash nor in satisfaction.
If you value a comfortable retirement, don't sell a single investment. Taking $30,000 from your IRA might be the difference between having dinner at Denny's and buying day-old bread, tuna, macaroni, ketchup and rice at Dollar Tree. You don't owe your kid that kind of sacrifice!
"Only two things are infinite-the universe and human stupidity," remarked Albert Einstein, "and I'm not sure about the former." Contrary to what the marketing departments of academia advertise, pursuing a college degree is a waste of time for most kids and a waste of money for most parents. Because education has become a huge, profitable government-funded business (like health care), every bonehead, pothead, meathead and stupidhead is encouraged to matriculate. That's "equal opportunity." Certainly, taking online classes sitting at Starbucks is easier than working for a living. This growing tsunami of intellectual vacancy inexorably dilutes the quality of the student body and diminishes the teaching process. To ensure "equal outcomes," colleges teach to the lowest level to maintain graduation goals mandated by government bureaucrats. Most degrees aren't worth a road apple, but colleges continue graduating larger numbers of students, whose anemic skills ensure subpar performance in the workplace. We are watching the dumbing down of America. In Europe and Asia, college entrance slots are highly prized and earned by students with superior qualifications. Europe doesn't waste money on huge sports complexes, multimedia activity centers, paying coaches millions of dollars a year or flying marching bands plus equipment all over the place.
You have some excellent investments, and I applaud your positions in AT&T, General Electric, Google, Visa, Southern, Altria, Realty Income and Facebook. Three of your mutual funds-the Dodge & Cox Stock Fund, the Fidelity Select Biotechnology Portfolio and the Vanguard Health Care Fund-are extraordinary, but sell the Vanguard Long-Term Bond Index Fund. I'd also sell Annaly Capital Management, Yahoo, General Motors, Xerox and Unisys. Use the proceeds to buy 300 shares of Aqua America (WTR-$28) and 100 shares of Johnson & Johnson (JNJ-$101), adding 100 more shares each of Southern (SO-$45) and AT&T (T-$33). Then use the remaining cash to buy 285 shares of Pfizer (PFE-$33).
Persuade your boy to join the Army. That's the only way he'll find his two feet to stand on. When he completes his tour, he'll have the maturity and discipline you failed to give him. He will also have a marketable skill.
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Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at mjberko@yahoo.com. To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.
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Published: Tue, Nov 24, 2015
