(MONEY Magazine) – ''We need more stable income.''

''We're not going to panic,'' Genevieve Churchill kept saying, as if to reassure herself as well as her husband Bob. But the truth is, the Churchills, both 73, were plenty frightened by the stock market crash. They rely on a portfolio of mutual funds, stocks and a limited partnership in real estate for nearly half of the $58,000 a year that gives them a relaxed retirement on Lake Sammamish in Redmond, Wash., near Seattle. ( With 57% of those assets in the stock market, they watched $23,000 of their $248,000 portfolio evaporate from Oct. 16 to Oct. 23. Investments in 1986 earned them 13%, much of it in capital gains,and they had expected to do even better this year. Bob was getting nervous about his strategy even before the crash. Two of his top 1987 performers through September, Eaton Vance Growth Fund and Massachusetts Investors Trust, were up about 40%. He and his wife also own a few Ginnie Mae and bond funds, which fell after interest rates began rising last April. In early October Bob told Money: ''We know we should move more to income funds, but the growth ones have been so good that we hate to part with them.'' The Churchills, who married three years ago and still twitter like newlyweds, have been living a retiree's dream. They flit from tailgate parties at Washington Huskies football games to ski holidays in Sun Valley. Those doings take money. So far this year they have tapped their assets for $20,000 worth of interest, dividends and capital gains. Bob has no pension from the construction company managerial job he quit in 1979, but he collects $32,000 from Social Security and installment sales of real estate. The couple's financial worries are aggravated by rocketing property taxes on their two-bedroom ranch house, which sits on a 1.5-acre lot with 750 feet of frontage on breathtaking Lake Sammamish. Bob bought the property in 1941 for $8,500. It has appreciated fantastically; the taxes alone are $8,000, up 49% in just the past year. Our advisers agree that the best way for people like the Churchills to invest for income and reduce the risk to their principal is to transfer much of it into such things as Ginnie Maes (pools of mortgages backed by the Government National Mortgage Association) and bank certificates of deposit. As for the painful losses the Churchills would have to swallow in the process, Jody Scheiman, vice president of the regional brokerage firm Blunt Ellis & Loewi in Columbus, Ohio, says, ''The market could go up 1,000 points, or it could drop another 500. If you can't afford to see it go down, you can't afford to hold on.'' The Churchills balk at selling all of their equities, some of which pay high yields. As a compromise, David Cooper, a senior vice president at Dean Witter in San Francisco, suggests they move $90,000 to safer investments. (For help on which types of stocks and mutual funds to sell, see pages 97 and 126.) Cooper would have the Churchills put $55,000 of the proceeds in 30-year Ginnie Mae certificates, which were recently yielding 10%. Because many homeowners pay off their mortgages ahead of time, the nominal 30-year maturity drops to an average of 10 to 12 years. The disadvantage is that Bob and Genevieve would have to reinvest much of their principal at lower yields if interest rates fell and many homeowners refinanced. Even so, Cooper likes the high yield and intermediate maturity of Ginnie Maes for income-oriented investors in their golden years. Another way to secure reliable income is through federally insured certificates of deposit, says Cooper. Financial planner Robin Oegerle, president of Financial Strategies in Washington, D.C., agrees. She recommends that the Churchills invest their remaining $35,000 there. By staggering maturities from six months to three years at recent yields averaging 7% to 8%, they can hedge against interest-rate swings. If rates go up, they will have money to reinvest at higher rates. But if rates fall, they will still enjoy above-market yields on at least part of their portfolio. If the Churchills follow the advice, consultants say they will get a reliable 10% a year, which is more than they can count on from their present holdings -- and it will come at much lower risk.

''I want a limo and a chauffeur.''

Last New Year's Eve, John Jones, a 34-year-old Sacramento bachelor, vowed to get serious about building his wealth. Although such resolve usually vanishes with the champagne, his did not. In September he landed a potentially lucrative sales job with Digital Equipment Corp. and began saving $300 a week -- half of his take-home pay. Now he aims to double his $49,400 net worth in 1988. Nothing as trivial as a 500-point drop in the Dow can shake John from his goal. ''I think a 40-foot cigarette boat and a chauffeured limousine are basics to own by age 65,'' says John. Because he is single and secure in his job, our advisers agree that he can take chances with some of his money. But they urge him to play with only a third of it and preserve the rest in surer positions. Nearly half of his net worth is tied up in personal belongings and rental real estate. Another $10,000 is locked into a 401(k) plan. That leaves $17,600 to invest, of which $10,000 is in stocks and $7,600 in savings. All three advisers want him to keep $4,000 liquid for emergencies, so his aggressive investing kitty amounts to only $13,600. If John wants to take a fling with that sum, Michael Murphy, editor of the biweekly California Technology Stock Letter (155 Montgomery St., San Francisco, Calif. 94104; $325 a year), recommends that he try Intelligent Systems (recently traded on the American Stock Exchange at $4.75), a $160 million master limited partnership that makes add-on products for personal computers, and Western Microwave (sold over the counter at $3.50), a $13 million marketer of microwave technologies. Murphy expects them to gain at least 30% annually through 1990 or 1991 but thinks they could even double in '88. If John wants to take on still heavier risk, he can choose a stock that might go down and sell it short. If the price falls 20%, he could buy it back and collect as much as 40% profit -- perhaps in a matter of days. If the stock goes up, however, there is no set limit to how much he can lose. (For help on how to sell short, see page 145.) Murphy, who is also editor of the Overpriced Stock Service letter, suggests shorting Capital Cities/ABC (New York Stock Exchange, $332.50), which he believes was too optimistic about its total audience share under the new people-meter measurement and will be forced to give advertisers free air time. In his employer's 401(k) plan, John can choose among four funds: two equity, one money market and one guaranteed income. He is eyeing one of the equity choices, Windsor Fund, but Ron Goldberg, president of Investors Advisory Services in Overland Park, Kans., advises him to opt for the safety and 8.5% yield of the guaranteed-income fund. Next, John intends to put an additional $387 a month into the retirement plan. George Barbee, executive director of the Consumer Financial Institute in Waltham, Mass., suggests that he split this money between Windsor and guaranteed income. John won't double his worth by heeding the advice of Barbee and the others, but he can hope for a 20% return.

''We need a solid base to raise kids.''

As co-founder of the Cream City Dance Company, an experimental troupe in Milwaukee, Nancy Eiseman, 24, staked $5,000 of her own money on the venture last spring. All she hopes for is a break-even artistic success. Eiseman, a professional dancer, and her husband Bill, 27, a real estate broker, want to take no other bold leaps, however. The stock market's antics have made them hesitant about equities. ''You have to be a cotton-picking genius to manage stocks,'' says Nancy. Yet the Eisemans, who married in June 1986, plan to start a family in five years and want to see their $33,000 of available capital become ''a solid base to raise kids.'' By frugal living they have saved $15,000 in a passbook account. And next May the couple will get $18,000 from a family trust. Rental real estate is the investment they know best. Earlier this year they bought two Victorian duplexes on Milwaukee's east side for $128,350, putting down $22,500 and mortgaging the rest at about 9.75%. They also own their residence, a $90,000 three-bedroom house near Lake Michigan. Despite mortgage payments totaling $24,000 a year, they are making do on salaries of $30,000 and rental income of $22,200. With so much money tied up in real estate and the dance company, Nancy and Bill need to diversify. They should start by setting aside $9,000 -- roughly three months of living expenses -- in a money-market fund for emergencies. That will leave $24,000 to invest. While acknowledging that worries about the stock market are understandable, the investment pros insist that equities are still a premier growth investment for young couples like the Eisemans, whose long-haul view relieves them of the almost hopeless task of timing the market with precision. Says E.O. Edgerton, chairman of Capital Investment Counsel in Raleigh, N.C.: ''A good saver does not have to be a great investor. He simply needs to buy quality and be patient.''

Edgerton suggests putting $12,000 in stocks of cash-rich, low-debt companies. Among those he mentions are Dreyfus Corp. (NYSE, $24.25), the mutual fund company, a tightly managed, debt-free operation with $231.8 million revenues and $500 million in cash, and Boeing (NYSE, $37.50), whose debt is only 5% of its equity. Dreyfus, with a price/earnings ratio of 11.6, is down 16% in 1987, while Boeing (P/E 13.6) is down 27%. William Blount, a senior vice president at Paine Webber in Portland, Ore., leans to consistent earners, such as Borden (NYSE, $45; P/E 13.8), the $5 billion food and chemical manufacturer, and Royal Dutch Petroleum (NYSE, $106.75; P/E 10.2), the second largest international oil company. With half of the $24,000 in equities, Edgerton would put most of the rest in high-grade corporate bonds, such as IBM's 10 1/4% issue maturing in 1995 and selling recently at $1,000 par value. He also recommends Exxon's deeply discounted 6% bond of 1997 (NYSE, $787.50). Its yield to maturity -- current interest plus a $220 capital gain in 10 years -- is 9.9%. For further diversification, Edgerton and Michael Golub, director of securities at the Lefcourt Financial Group in Palo Alto, Calif., recommend convertible bonds, which yield less than ordinary bonds but appreciate when the underlying stock, which you can swap them for, goes up in price. Golub likes the Humana 8 1/2% convertible of 2009. He thinks this hospital management company will profit as the population ages. At a recent price of $870, the bond yields 9.8%. By deploying their savings and trust funds as the advisers suggest, the Eisemans figure to earn about 15%, doubling their wealth in five years.

CHART: TEXT NOT AVAILABLE CREDIT: NO CREDIT CAPTION: NO CAPTION DESCRIPTION: Bob and Genevieve Churchill's present financial holdings and advisers' recommendations.

CHART: TEXT NOT AVAILABLE CREDIT: NO CREDIT CAPTION: NO CAPTION DESCRIPTION: DESCRIPTION: John Jones's present financial holdings and advisers' recommendations.

CHART: TEXT NOT AVAILABLE CREDIT: NO CREDIT CAPTION: NO CAPTION DESCRIPTION: Nancy and Bill Eiseman's present financial holdings and advisers' recommendations.