Oct 11, 2015 3 min read

DEAR BRUCE: You stated that a person could live off a 5 percent interest rate. Where in today’s market can you get a 5 percent interest rate? — J.N.

DEAR J.N.: This comment certainly did generate an extraordinary amount of interest and subsequent correspondence from my readers. What I suggested was that a 5 percent return is not overly ambitious when one is investing in the market. That doesn’t mean that every investment is going to pay 5 percent. Some may pay 10 percent or 15 percent, and some may lose.

Furthermore, there are many profitable investments to be made in companies that have been around for a long time and consistently pay a dividend. For example, if a company pays a 2 1/2 percent dividend, then you will only have to have a 2 1/2 percent growth rate to make my stated 5 percent, a reasonable proposition.

But nothing is for nothing. There is some degree of risk involved, and a great deal of research is necessary to find the right companies, but trust me, they are out there. Personally, I have made more than 5 percent with the help of an investment adviser. It should always be mentioned that some years you’re likely to lose over the long pull. However, you should be well ahead with this method of investment.

DEAR BRUCE: I am considering moving into a retirement home that offers me an option of renting or buying. I am living now in my home of 50 years. What would be my best option, considering tax consequences, etc. Currently, my home value is approximately $350,000 (we paid $32,000). — I.O.

DEAR I.O.: You left out a very important piece of information: How much would you have to invest in buying? Frequently, the buying option allows you to stay in a residence by paying a modest amount of rent. However, the money is largely gone.

The fact that your home gained more than $300,000 in value is impressive. But given the 50-year ownership, the appreciation is relatively modest.

My guess would be that you’re in your 70s or 80s. For many at this age, I think renting is the way to go, but if you have a long life expectancy and plan to be around for a while, maybe purchasing is an option. Until I know how much that option would cost, I can’t make any further comments.

Send questions to bruce@brucewilliams.com. Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.

(The Bruce Williams Radio Show can now be heard 24/7 via iTunes and at www.taeradio.com. It is also available at www.brucewilliams.com.)