The advice

To help the Luo family, Money Magazine consulted Beijing's Ma Xiaorui, who in 2006 became one of the first certified financial planners in China. The Craigs met with Manhattan Beach, Calif. certified financial planner Eileen Freiburger. Their suggestions:

Think about what's next - really. Luo Wei's career in taekwondo won't last forever, as her leg injury indicates. So Ma suggests she start planning financially for the next stage of her life. In Wei's favor: her sizable real estate investments and the options open to her as an elite athlete (a job, perhaps, with the state sports administration).

Ma says that if Wei wants a new career, she should start thinking about its costs (for instance, if additional training is needed) and how much of her current salary she should be saving to ease the transition. But Wei's reaction is noncommittal. "I currently have no long-term plans," she says, "as to what I should do after finishing my taekwondo career."

Save for future medical bills. Health care is the single biggest expense for Wei's mother Zeyu, who suffers from diabetes and high blood pressure and can't get health insurance because of her age and ailments. Ma advises her to cut back on her spending now to better preserve her savings, so she'll have enough money for medical expenses later on.

"Of course, it's good to limit your spending," agrees Zeyu. But instead of thinking of areas where she can cut back, she starts talking about areas where she may have to boost spending: for example, entertaining clients of the logistics company that she invested in and where she'll be working part time after her retirement from the construction firm.

Diversify risk. The danger of having too much of your money in a single company's stock is universal. Just as employees of Enron, WorldCom and Bear Stearns did in the U.S., Zeyu is taking a risk by having half of her nest egg invested in the logistics company on which she's staking her retirement.

The planner suggests that she gradually diminish that stake and invest the money in mutual funds instead. Yes, it will still be concentrated in the roller-coaster-like Chinese stock market, but at least the risk will be spread among more companies. "Sounds reasonable," says Zeyu, "but I have no time to do it."

Fight inflation. The 40% of Zeyu's money in cash, on the other hand, is safe in the short run but doomed to be eaten away by inflation (currently 8% in China). Ma regularly suggests that her clients put some money into the stock market and bonds and some into other Chinese banking products promising a return of principal but higher interest rates than bank deposits. "Bad idea," says Zeyu. "I don't like to invest in funds."

Raise your sights. Freiburger strongly believes that Charlotte should not limit her search to junior colleges for financial reasons. Given Charlotte's athletic achievement and strong grades, the planner is convinced Charlotte could get a sizable financial-aid package from any number of four-year institutions.

"Shame on all of us if you don't let her apply to every school she wants to go to," Freiburger says. "If these colleges are not recruiting Olympians, who are they recruiting?"

Sell the house - fast. Jim can't even think about retiring, Freiburger says, until he gets out from under the threat of having to pay a $9,000 monthly mortgage and knows how much of a profit he'll make when he sells the house he's building. To expedite a deal, she suggests he structure an agreement with a selling broker so the broker gets a bigger commission if the home sells quickly.

But Jim is not enthusiastic about that strategy. "I know I'm not going to get as much as I want, and I want to keep as much of the money for myself as I can," he says. In today's market, however, Freiburger thinks he's being shortsighted. "That loan is going to strangle you if you can't unload this house," she says.

Fix your mix. Jim follows a simple strategy in his 401(k): Once a year or so, he looks at which funds in the plan have had the biggest returns, then switches into them. He's down 10% in his latest quarterly statement. "What has gone well will not always be going well in the future," Freiburger notes. "You can't look in your rearview mirror to decide which asset classes to jump into."

Jim's portfolio is now 100% in stocks and heavy in funds with concentrated holdings in a small number of stocks - funds that tend to have big price swings. To reduce risk as Jim nears retirement, the planner suggests a new allocation with 35% of the portfolio in bonds, 40% in U.S. large-cap stocks, 10% in small-cap and midcap stocks and 15% in international funds.

With just a month to go before the Olympics, Luo Wei still has no concrete plans for what she'll do after the Games. Finish graduate school. Buy a car - possibly a BMW. That's it. "I don't like to set a goal for myself," she says.

Meanwhile, in California, Jim and Charlotte have been following up on Freiburger's advice. He has already reallocated his 401(k) as the planner suggested and is now considering postponing his retirement until age 62, not 55. "I'll feel more comfortable if I wait," he says. His wife says that the later retirement date was inevitable. "He'd probably have to do that so he can afford Charlotte," she jokes.

Or maybe she's not joking. After all, the next Olympics is only four years away.

- Additional Reporting By David Yang 

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