Subscribe to Money Magazine
CNN/MoneyWeb
Mutual Funds
graphic
Click here
Saving early and often
Archie Chaney is saving a lot -- but our planner thinks he could get more mileage out of it.
January 10, 2005: 1:25 PM EST
By Pablo Galarza, Money Magazine

NEW YORK (Money Magazine) - Archie Chaney, 33, picked up an interest in investing when he was still in college at the University of Notre Dame.

And that has helped him become a serious saver at an age when a lot of us are just getting started.

With every paycheck, he puts $50 into mutual funds for each of his two kids, Korynne, 5, and Kaleb, 3. He wants them to start their adult lives with the money to pay for college or a wedding.

"I'm doing everything I can to make sure that my kids are taken care of," says the Denver information technology consultant.

Chaney also sets aside $50 for his and wife Tonya's retirement, in addition to the 6 percent of his salary that goes to his 401(k) fund and the 3 percent that goes to an employee stock-purchase plan.

Chris Cordaro, a planner with RegentAtlantic Capital in Chatham, N.J., likes Chaney's aggressive savings approach but wants to tweak where the money goes.

For one thing, Chaney is leaving money on the table by not contributing even more to his 401(k) plan, which offers an employer match.

He can afford the higher contribution by cutting back on payments into the employee stock plan. Cordaro suggests investing the kids' college money into the Colorado 529 plan, because the state offers locals a tax deduction on contributions.

Not counting the college funds, Cordaro says the Chaneys ought to have about 15 percent of assets in bonds -- he favors short-term bonds and Vanguard Inflation-Protected Securities (VIPSX) as an inflation hedge -- and the rest in stocks.

Cordaro thinks it's important for Chaney to have significant exposure to foreign stocks, because studies show that in the long run a globally diversified portfolio should be less volatile than a U.S.-only one while providing similar returns.

Fortunately, there's a very good international pick in Chaney's 401(k) plan: Artisan International (ARTIX). For the money outside his 401(k), Cordaro points out that small and mid-size overseas stocks are even less likely to move in step with the U.S. market, so he recommends that a portion of any of Chaney's investments outside his 401(k) go to T. Rowe Price International Discovery (PRIDX).

Among large-cap funds, Cordaro likes Vanguard Total Stock Market Index (VTSMX), which tracks the Wilshire 5000 index of nearly all U.S. stocks, for its low costs and its tax efficiency.  Top of page




  More on FUNDS
Millennials may not be able to afford retirement essentials
Pensions ask retirees to pay back tens of thousands
Many middle-class Americans plan to work until they die
  TODAY'S TOP STORIES
5 people you might not tip (but should)
Stocks: It's report card time on Wall Street
General Mills reverses course after criticism




graphic graphic

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.