Dear Mr. Berko: My husband unexpectedly passed away four years ago. Several years before he died, a life insurance agent insisted on selling us an equity-indexed universal life insurance policy, and we had to invest at least $700 a month. But with your help, we were able to get eight times as much insurance from a term life insurance policy from the same company. You said it made more sense, and the annual premiums were only $65 a month. I am completely debt-free and have over $100,000 in four no-load Fidelity mutual funds and over $40,000 in stocks you recommended.
I just turned 45 and have two boys — one who will finish high school this year and one who will finish next year. They want to “make a lot of money” but don’t have the aptitude to do well in science, technology, math or engineering. Because they’re good at sales, do you think they could “make a lot of money” as stockbrokers? And how would they get started?
I also have a question concerning a beautiful 3.5-carat diamond that my husband gave $81,000 for on our 15th anniversary five years ago. It was also supposed to be an investment. At 45, I have decided to go back to work as a nurse and want to sell the ring. I don’t know anything about diamonds. The jeweler who sold it to us offered me only $22,000! I thought he was joking, but then I realized he wasn’t. I would appreciate any suggestions you have on this, too.
— LS, Springfield, Ill.
Dear LS: In my opinion, the only thing that makes a 3.5-carat diamond a wonder to look at is the realization of how much some silly schnook is willing to pay for it.
The weight of a diamond, expressed in carats, is only one of the five factors that determine the price of a stone. The term “carat” derives from carob seeds, which were once thought to have a uniform weight. When a diamond is weighed, the stone is given a weight in carats, which is rounded to the nearest tenth. One carat is 200 milligrams, or about 0.007 ounce.
Stones that are 3 carats or heavier are becoming increasingly rare finds, which is why a 3-carat diamond is worth much more than three diamonds weighing 1 carat each. And depending on the remaining four factors, your 3.5-carat diamond could be worth between $7,000 and $90,000 a carat! The other four factors are color, clarity, cut and shape. Each of those factors has a dedicated rating system that determines the desirability/rarity of the stone and the price an investor is willing to pay. Suffice it to say your diamond must be graded by an expert — for example, a professional from the Gemological Institute of America — to determine its value. Though I know a few of these fellows, I’m not comfortable enough with their bona fides to recommend a name. So I recommend that you go to Christie’s or Sotheby’s in Chicago and ask someone there to recommend a source. I’m infinitely more comfortable with the probity of those big auction houses than of any storefront jeweler. The one you choose may even offer to auction the stone.
As far as your sons go, most of us want to make the big bucks, but few of us will. And even if your boys were experts in STEM (science, technology, engineering and math) courses, there’d be little guarantee that the big bucks would follow. The only certain way to make huge dollars is to be involved in state or federal politics as an elected official or a lobbyist. However, I find that the most successful people are those who thoroughly enjoy their professions and are proud to be the best geography teacher, plumber, mechanic or social worker they can be. Be honest in your work and the master of your trade and everything else that is good will follow. I know this sounds corny, but it’s the gospel.
