Dear Mr. Berko: I have $38,000 to invest specifically for income. This money represents a certificate of deposit that just came due and I'm willing to take some risks to get a higher return than 4 percent. So I would appreciate your recommendation of several investments that can give me a much higher return. I don't want junk bonds or foreign bonds, and I want to keep my money here in the United States. My broker showed me some emerging country bond funds, some real estate investment trusts and some Canadian oil stocks with returns between 15 percent and 25 percent. But I just know, in spite of his assurances, that those yields are temporary. Over the next six years I will have six more identically sized CDs coming due. Each will be about $38,000 because I thought I'd need that $38,000 to live on until my pension kicks in on 2014. But I got lucky and now will be able to invest $38,000 a year. So give me your best recommendations and I will be back next year for another series of recommendations. — C.L.: Bethlehem, Pa.

Dear C.L.: OK. Consider investing $6,000 in each of the following six issues:

Bank Of America 7.25 percent Convertible Preferred (BAC+L) trades at $695 and has a par value of $1,000. This global powerhouse owns Merrill Lynch, Country Wide Financial, FleetBoston Financial, MBNA and LaSalle Bank. I believe BAC will make a good recovery in the coming four to seven years. So I'm recommending the above convertible preferred. It has a swell 10.7 percent current return, is eligible for the 15 percent dividend tax rate and is convertible into 20 shares of common stock at the owner's discretion after January 2013. It's rated A-plus, but I have zero confidence in the veracity of Standard & Poor's or Moody's ratings.

Citigroup Global Markets Inc., another huge bank with more than 200 million customers in 100 countries, owns Smith Barney, CIT Financial, Primerica and a few other choice subsidiaries. Like BAC, Citigroup was clobbered by the mortgage mess, which created some excellent investment opportunities. Because I believe Citigroup will recover well in the coming four to seven years, I'm recommending the CitiGroup 7.125 percent TruPs Preferred (C+V) trading at $16.80. This issue is callable anytime at $25, matures in July 2031 and the $1.78 dividend provides an 11 percent yield at the current price. This dividend doesn't qualify for the 15 percent tax rate.

I also like the Regions Financial 8.875 percent Trust Preferred Securities (RF+Z) trading at $19.50, callable in 2013 at $25 and rated AAA by Moody's. The $2.22 divided, which is not eligible for the 15 percent tax rate, has an 11.1 percent current return. This Birmington, Ala., bank has more than $80 billion in assets and is the 15th largest bank in the nation. I think it will recover nicely in the coming four to seven years.

Now I'd like you to consider the following non-leveraged, tax-free, closed-end funds. I don't think there's any doubt that tax rates will move much higher in the coming years and there's talk the IRS might place a limit on the amount of tax-free income Americans can earn. The talk places that limit at $40,000. However, those lucky folks today who have more than that will be grandfathered in but new investors will have that limit imposed on them. Tax-free yields are about the highest I've seen in 25 years and the following issues appeal to me.

Blackrock Municipal Income Trust Fund (BFK-$9.69) trades at a 5 percent discount to net asset value, or NAV, and the 0.0686 cent monthly dividend yields 8.5 percent, which is equivalent to an 11.76 percent taxable yield. The Van Kampen Municipal Trust Fund (VKQ-$10.50) trades at a 2.2 percent discount to NAV and its 0.07 cent monthly dividend yields 8.02 percent, which is equivalent to an 11.13 percent taxable yield. And finally, Morgan Stanley Municipal Income Trust (OIB-$6.39) trades at a 3.3 percent discount to NAV and its 0.0425 cent monthly dividend yields 8.17 percent, which is equivalent to an 11.35 percent taxable return.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, FL 33429 or e-mail him at malber@comcast.net. 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.

COPYRIGHT 2008 CREATORS SYNDICATE, INC.

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