Q. My wife and I have about $320,000 of investments. About a third of that amount is invested in two royalty investment trusts. One is oil-based, and the other is in natural gas. Even after the recent dunking the energy market has taken, we are still 20 percent above water on these.

Obviously, we are completely unbalanced in the portfolio, but we are addicted to the dividends. I took early retirement at 55. I am now 62 and my wife is 55. The negative I have heard from my adviser is we are "heavy into a depleting resource."

At our age, I think we will have left this world before anyone should worry about the "depleting resource."   What do you think?

---D.M., by email from Seattle, WA


A. Actually, you and your wife have a combined life expectancy of 32.9 years, meaning that one of you is likely to live that long. So you're not exactly "here today, gone tomorrow." In rap star lifetimes, your joint expectancy is forever. So you should be concerned about energy depletion over the period.

Fortunately, the news isn't all bad: Higher energy prices, within limits, work to increase the amount of recoverable energy in a field because it will pay to invest the additional money to extract more energy.

Another way to rationalize your position is that your energy investment is a bond substitute of sorts.

Even so, you've got a very big commitment to energy and should reduce it.


Q. It appears to me the Federal Reserve is controlling inflation by controlling interest rates. If this is true, could a rogue Fed actually induce hyperinflation or deflation?

---H.C., by email from Dallas


A. While the Fed is seen as our inflation fighter, it's no longer clear whether Federal Reserve actions have much effect on inflation as we usually see it. Recent interest rate increases may have an effect on asset inflation (think houses), but it appears to have little influence on the cost of inexpensive foreign goods, which are a source of deflation. It also seems to have little influence on domestic services, which are a source of inflation.

Our central bank, like all central banks, has the power to increase or decrease the supply of money. But I doubt we'll ever see a "rogue Fed."

What some fear is a reserve bank that helps the federal government finance perpetual deficits by monetizing more and more debt. It's notable that Richard Fisher, President of the Dallas Federal Reserve Bank, has repeatedly stated in speeches that it is important that the Fed NOT monetize federal debt.


Q. My wife and I are having an ongoing discussion about the benefits of using a credit card every time we buy something. We have been advised that the "free" mileage and other related benefits far outweigh the cost of the card. I say that it is a bit of a scam. My wife says I'm a bit on the wrong side. What do you say?

---R.I., by e-mail from San Antonio


A. If you think of airline miles as a form of currency, the currency has been losing its value rapidly. Using the currency has become more difficult and the number of miles needed to get a "free" flight has increased.

For most people, the value obtained by using a credit card is completely offset by interest payments on outstanding balances and purchases that would not have been made if it had been necessary to pay cash, write a check, or use a debit card.

If you have trouble paying your monthly charges, have a lot of consumer debt, or fall short on your savings goals, you should reduce or limit the use of credit cards. If you pay no interest on credit card debt, have little other debt, and are meeting your savings goals, your credit card is "convenience cash" and you should collect travel rewards.