How can Alaskans make the most of the PFD? Here are a few ideas.

Alaskans file their Permanent Fund dividend applications in downtown Anchorage in March 2016. (Photo by Rachel Waldholz, Alaska Public Media – Anchorage)

Alaska’s Permanent Fund Dividend has been in the news over and over this year because of the ongoing political battle over how much money Alaskans should receive in the annual oil fund check.

Gov. Mike Dunleavy was pushing for $3,000. When he announced the PFD amount back in August, Dunleavy said he wouldn’t veto the amount approved by the Legislature, $1,600, because he didn’t want to risk not having dividends. But, he said, he would still try to close the gap later.

“While this decision was not easy, it was not easy at all, I’ve decided that I will not veto this incomplete dividend,” said Dunleavy, in a video statement.

Beyond the political battle, part of the PFD story is a lot more personal. If you’re handed this sum of money each year, how do you make the most of it?

The state distributed the PFD last month. That check may already be spent. But, maybe some of those funds are still available.

Laurel Renkert is a financial adviser with Waddell & Reed, Inc. in Anchorage. She says, when thinking about how to make the most of the PFD, first and foremost, it shouldn’t be considered a guarantee.

Interview Highlights:

Meeting basic needs: “I think it’s important that it’s not something we count on, and therefore, use it for something you need as opposed to something you might want. So I take that approach and that’s what I recommend as a starting point. If you think of Maslow’s hierarchy there are certain things that we need — food and shelter, safety. And if you need that money to go toward bills or something more basic in nature, that’s where it needs to go.”  

If basic needs are met: “The starting point that I reccomend is reflecting on whether there is something short-term that you might want to use it for. You might not need it immediately, but maybe there’s a trip you’re planning that might happen in the next two years. So you want to benchmark it for something shorter term. That’s not necessarily something you would invest because of the shorter time frame.”

For longer-term goals: “Maybe you’re saving for a down payment on a house, for example…Maybe it does make sense for you to invest that money in something low-risk that you can then take out once you’ve found your house and saved enough money for that.”

Different types of investors: “There are do-it-yourselfers who are probably going to go online. And they might use a platform like Vanguard or Fidelity. Something that’s really meant for the online user. And then there are, on the other side, people like myself. We handle all the investments for you. We might get your input in terms of what you’re interested in. But then we’re going to be the ones picking out…based on what your goals are…here’s what we’re trying to achieve when we invest it this way.”

When kids receive a PFD: “It may depend on the goal…my parents were able to save my permanent fund dividends for my entire life. So I was able to use those for college. And it was a great teaching tool for me as a teenager, to learn about, this is what this money is potentially for, for your education, and how did it grow. The University of Alaska does have a college savings plan where you can direct part of, or all of, your PFD, or your child’s for that matter, into the UA college savings plan.”

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Securities and investment products and services offered through Waddell & Reed, Inc., member FINRA and SIPC. Insurance products are offered through insurance companies with which Waddell & Reed has sales arrangements. The information presented on this show is solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy any financial product or service mentioned. Any opinions expressed are those of Laurel Renkert and is
subject to change, based on market and other conditions. For more detailed information regarding any of the topics discussed on today’s show please call (907) 331-0188. Waddell & Reed does not offer tax or legal advice; please consult with a professional prior to making any financial decisions.

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