(MONEY Magazine) – So far, 1992 has been a year of disappointing choices -- and we're not talking only about the three presidential candidates. Just look at your options if you have money to invest. Stocks are trading at precariously high prices. Bond yields, recently 7.4%, are as stingy as they've been in six years. And forget about cash investments -- money-market funds and short-term certificates of deposit are actually paying less than the 3.1% rate of inflation. One savvy strategy, however, can still safely earn you 10% or more over the next five years or so. The secret: Aim for both growth and income in your portfolio -- a technique known as total-return investing. The next several years figure to be precisely the kind of period in which this approach excels. Because of the economy's sluggishness, analysts predict that for the rest of the decade, the average annual percentage rise in stock prices won't hit double digits, while bond yields will drop to 5.5%. In that case, the steady compounding of stock dividends or bond interest -- reinvested in more stocks or bonds -- could make the difference between healthy returns and mediocre ones. ''If you buy a stock with a 5% yield, you are 50% of the way toward a 10% return,'' points out Gail Dudack, a market strategist for the investment bank S.G. Warburg. Equally important, a total-return approach can lower your portfolio's risk. For example, stocks lost money in 11 of the 46 years following World War II, falling an average of 9.4%, according to the Chicago investment research firm of Ibbotson Associates. But investors who owned Treasury bonds as well as equities saw their losses at least partially offset in seven of those years by bond market gains that averaged 4.8%. To find total-return investments that figure to earn at least 10% annually over the next few years, Money canvassed more than 40 analysts, portfolio managers and financial advisers. The experts' recommendations fall into five categories. The one you choose will depend on your goals and your taste for risk -- and on the amount of time and money you can devote to investing. Three of the categories, total-return mutual funds, stock and bond funds and convertible bond funds, work for people with relatively small stakes -- from as little as a few hundred dollars to $5,000 or so. The others, high-dividend stocks and a mix of stocks and bonds, are best suited for investors with portfolios of $25,000 or more.

High-dividend stocks The classic total-return investment -- a blue-chip stock or a utility with a dividend yield well above the market average -- combines both growth and income in a single security. High-yielding stocks, however, require a commitment of $25,000 or so, since you must hold issues from at least six to eight unrelated industries to keep your risks reasonably low. In following this strategy, look for companies with dividend yields of 4% or so and the earnings strength to raise their payouts every year. Growing dividends not only throw off increasing amounts of income to reinvest but also tend to drive up the value of the shares you already own. This double-barreled approach has paid off handsomely for Brian Bovard, 48, a management consultant in Atlanta (pictured opposite). His $240,000 portfolio focuses on high-yielding stocks like Northern States Power (annual revenues of $2.2 billion), $18.8 billion Dow Chemical and $1.8 billion drugmaker Syntex. ''I like companies that have above-average yields plus strong growth,'' says Bovard. Since 1985 his portfolio has averaged a 12% annual return. For income-conscious stock investors, John Slatter, senior portfolio strategist at Cleveland's Hickory Investment Advisors, recommends Ipalco Enterprises (recently traded on the New York Stock Exchange for $35; yielding 5.6%), the holding company for Indianapolis Power & Light (1991 sales: $650 million). Slatter predicts that business will surge with the completion of a new United Airlines maintenance facility in Indianapolis, which is expected to create 18,000 jobs. He foresees Ipalco's dividend rising 4% next year and predicts a solid 10.5% total return over the next 12 months. For investors seeking growth as well as income, William Rechter, manager of the Cowen Income & Growth Fund, singles out Boatmen's Bancshares (over the counter, $51.75; 4.3% yield). Once mainly a commercial lender, the St. Louis- based bank holding company (assets: $23 billion) is acquiring retail banks and S&Ls in the Southwest and Midwest. To maintain its clean balance sheet, Boatmen's will write off about 45 cents a share in acquisition costs this year, but its operating earnings should still climb 25%, says Dennis Shea, banking analyst at Morgan Stanley. Rechter expects Boatmen's to continue hiking its dividend at least 5% annually, and Shea predicts a 25% return over the next 12 months. New York City drug manufacturer Bristol-Myers Squibb (NYSE, $63.75; 4.3% yield; 1991 sales: $11 billion) is a favorite of Geraldine Weiss, editor of Investment Quality Trends ($275 a year; 619-459-3818). Since January, the stock's price has dropped 30% as sales slowed to merchants who had overstocked inventories ahead of Bristol-Myers' last price hike. But the setback is temporary, insists Weiss. She expects earnings to climb about 15% annually over the next five years as the company launches major new products, including Pravachol, a cholesterol-reducing agent, and Taxol, an anticancer drug. Earnings on them, as well as from overseas business (43% of total revenues), should protect profits against any possibility of federal price controls on existing drugs. Says Weiss: ''Bristol-Myers should return a minimum of 20% over the next year.''

Total-return funds If you don't have enough money for a well-diversified portfolio of stocks -- or if you would rather not spend the time researching them yourself -- consider a total-return mutual fund. Funds can give you diversification for as little as a few hundred dollars, and the fund's manager does the job of selecting and monitoring the fund's stocks. Moreover, says Jonathan Pond, president of Financial Planning Information in Boston: ''Total-return funds have nearly matched the returns of growth funds over the past five years with much less risk.'' Donald and Mara Giulianti of Hollywood, Fla. (pictured on page 75) began cautiously putting money into total-return funds in July 1991. ''Individual stocks made me nervous,'' says Donald, 50, a retired neurosurgeon. Working with a broker, the couple now have about $75,000 stashed in three highly regarded load mutual funds -- Phoenix Balanced, Investment Co. of America and Income Fund of America. So far the portfolio has returned an average of 13% annually. If you are willing to choose funds without a broker's help, you can find no- load funds every bit as good as the Giuliantis' -- and not have to pay a commission to buy them. One top choice for stock-shy investors is Lindner Dividend (up 22.4% for the 12 months ended Sept. 24; yield: 7.75%; 314-727-5305), says Thurman Smith, editor of Equity Fund Outlook ($95 a year; 617-397-6844). Unable to find many common stocks at prices he considers attractive, manager Eric Ryback, 40, currently has 83% of the fund's $536 million in assets invested in bonds and preferred stock. (A more typical allocation for equity-income funds is 75% common stocks.) In the past five years, the fund has returned 11.8% compounded annually -- 68% more than the average equity fund, with only one-third the risk. Pond likes $2.8 billion Fidelity Asset Manager (up 12.5%; yield: 6.75%; 800-544-8888). Manager Robert Beckwitt, 34, shifts the portfolio among stocks (recently 45%), bonds (40%) and cash (15%). The fund's 550 stocks include solid, established companies such as mortgage agency Fannie Mae, insurer | Primerica and French oil giant Elf Aquitaine. In the cash portion, the fund has loaded up on Mexican treasury bills paying 19%. ''They are secure investments, since Mexico's entire monetary policy is designed to protect the currency,'' Beckwitt says. Fidelity Asset Manager has gained a compound annual 13.4% since 1989, with only 45% of the risk of the average equity fund. The riskiest of our total-return picks, $637 million Twentieth Century Balanced (up 7.4%; yield: 2.2%; 800-345-2021), offers the zip of a growth fund plus a modest amount of income. Run by a team headed by James Stowers III, 33, the no-load keeps about 60% of its assets in high-flying stocks like Microsoft and Telefonos de Mexico, but stashes 40% of assets in high-grade bonds. Like most growth funds, Balanced is down this year (by 7.6%), but since 1989 it has delivered average gains of 12.4% a year -- twice that of the average equity fund.

Growth stocks and bonds This do-it-yourself strategy best suits people with $30,000 or more to invest and the confidence to pick their own securities. By assembling the growth and income portions of your portfolio yourself -- as opposed to one-stop shopping with a fund or with high-dividend stocks -- you can adjust your asset mix to match your market outlook and risk tolerance. The legendary investor Ben Graham, for example, recommended that investors vary their stock allocations between a conservative 25% and an aggressive 75% of their portfolios. When the market seems risky, as it does now, you should lean toward the low end of that range. Self-directed investors Anita, 50, and John Caggiano, 54, of Westport, Conn. (seen on page 76) are managing the distribution from John's pension by investing in individual stocks and bonds. Currently, about 40% of their $500,000 portfolio is in bonds and cash, with the rest in classic growth stocks, including The Gap, Philip Morris and Merck. Since 1989 the couple have achieved average returns of 13.5%. ''I enjoy looking for growth opportunities,'' says Anita, a freelance organizational consultant who often scans trade publications for potential buys. With many growth stocks out of favor with investors this year, now is a great time to find bargains, says James Mair, portfolio manager for Pasadena money manager Roger Engemann & Associates. Mair particularly likes Toys R Us (NYSE, $38.75). Analysts believe that the retailer (1991 revenues: $6.1 billion) could grab half of the $600 million in annual sales that had gone to its bankrupt competitor, Child World. Mair expects Toys to bring home a 30% gain in the coming year. Carlene Murphy, co-manager of the Strong Common Stock fund, is a fan of MGIC (NYSE, $38), a Milwaukee-based mortgage insurer (assets: $894 million). Analysts foresee stepped-up demand for private mortgage insurance, which is sold to home buyers making down payments of less than 20%. Murphy predicts a 32% return in the next 18 months.

If you're willing to take moderately higher risks in hopes of an even better return, Arnold Kaufman, editor of Standard & Poor's Outlook ($280 a year; 800-852-1641), suggests you consider Harley-Davidson (NYSE, $28.25). Surging demand for its $5,000 to $15,000 motorcycles have left this small Milwaukee manufacturer (1991 sales: $940 million) with a backlog of orders that will take at least three months to fill. The company has added new production capacity, and analyst Ronald Glantz of Dean Witter predicts: ''Within the next 12 months, Harley-Davidson shares should climb by 48%.'' As for the bond portion of your portfolio, keep your maturities to about 10 years or less. Analysts warn that interest rates are unlikely to fall much lower -- and after the election, rates could spike up, trashing the value of longer bonds. Moreover, seven- to 10-year issues historically offer 85% of the returns of 30-year bonds with only 50% of the risk, according to Edward Martin, manager of Babson Bond Trust-Long Term. Intermediate Treasuries are an especially good buy today, since they offer U.S. backing and their yields are a third of a percentage point lower than those of corporates. But investors in the 28% federal tax bracket or higher (taxable income over $21,450 for individuals, $35,800 for married couples) can do better with municipal bonds. For such investors, 10-year high-grade tax-frees now pay the equivalent of a taxable 7.5%, vs. 6.5% on 10-year Treasuries.

Growth funds and bond funds For as little as $5,000 you can construct a stock and bond portfolio out of mutual funds. That way you leave the investment picking to the fund managers but retain the freedom to make your own allocations between stocks and bonds. Keep in mind, though, that you will have to rebalance your portfolio occasionally to maintain your desired allocation. That means selling shares of funds that have zoomed (and consequently could be near their peaks) and buying funds that are slumping (and, you hope, about to take off). For example, Paul, 33, and Krystyna Stadnik, 32, of Sunnyvale, Calif. (pictured on the cover and on page 70) have spread 70% of their $132,000 portfolio among seven stock funds and stowed the rest in two high-grade bond funds and a money fund. Recently the Stadniks have been adding money to overseas funds, including Montgomery Emerging Markets and Harbor International, two well-run funds whose returns have dragged so far this year because of the global recession and Europe's currency turmoil. ''Market downturns are a chance to buy more shares cheaply,'' Paul observes. To benefit from international growth without ignoring the U.S., consider a global fund, which buys equities both here and abroad. Sheldon Jacobs, editor of the No-Load Fund Investor ($105 a year; 800-252-2042), likes $358 million Scudder Global (up 7.9%; 800-225-2470). Managed by William Holzer, 43, the no- load fund now has a 36% stake in the U.S., with 37% in Europe and 6% in Japan. About 30% of the fund's assets are invested in banks and financial service companies. ''The contraction of banking systems in the U.S. and Japan has created a capital shortage worldwide,'' Holzer says, ''which means that the surviving financial institutions will command higher share prices.'' During the past five years, the fund has returned 23% more than the average equity fund with 20% less risk. Another superb candidate is $105 million Strong Common Stock (no load; up 11%; 800-368-3863), managed by Carlene Murphy, 36, and Dick Weiss, 41. They look for companies selling at discounts to the market that have the potential to turn out earnings stronger than Wall Street analysts anticipate. While some of their biggest holdings are large companies, such as Nestle and Hong Kong Bank, they favor stocks of little-known, medium-size firms, such as Reliance Electric, a Cleveland electric motor manufacturer with $1.5 billion in revenues, and $166 million Paging Network, a beeper service company in Plano, Texas. To play fast-growing small stocks, consider $650 million no-load Nicholas II (up 7.3%; 414-272-6133), says investment adviser Ron Yolles of Southfield, Mich. Manager Albert Nicholas, 61, favors companies that post 20% annual earnings growth and sell at below-market price/earnings ratios. Recently, Nicholas has been snapping up cyclical companies, such as $409 million Brand Co., a Chicago asbestos abatement and industrial cleaning firm, and beaten- down growth stocks, such as $210 million St. Jude Medical, a St. Paul maker of heart valves. During the past five years, the fund has posted returns 22% higher than the average equity fund with 85% of the risk. As with individual fixed-income issues, you can choose bond funds of varying maturities, as well as taxable or tax-free portfolios. To maximize your return, however, stick with no-load funds that charge expenses of no more than 1% of assets. Ken Weber, editor of Weber's Fund Advisor ($135 a year; 516-466-1252), likes Vanguard Bond Market (up 12.2%; yield: 6.5%; 800-662-7447) and Vanguard Municipal-Intermediate-Term (up 9.7%; yield: 5.4%), which carry bargain-basement expense ratios of 0.16% and 0.25% respectively.

Convertibles Like high-dividend stocks, convertible securities offer both income and growth potential in one package. Standing roughly between high-dividend stocks and conventional bonds in risk level, convertibles are bonds or preferred stocks that can be traded for a specified number of shares of the issuer's common stock. That conversion feature ties the security's value to the price of the stock. Thus the convertible will rise with the stock's price but not match it. When stocks slump, the yields on converts -- recently averaging 7.8% -- help limit their declines. During the past 12 months, the strong bond market has propelled funds invested wholly in convertibles up 14%, compared with 7.1% for the average stock fund and 9.2% for the typical bond portfolio. You can assemble a portfolio of individual convertibles for about $50,000. For help in picking them, you can call on experts at most major brokerages and consult Value Line Convertibles, available at most major libraries. John Calamos, head of Calamos Asset Management in Oak Brook, Ill., recommends Ford Motor convertible preferred stock, which is rated A- for financial soundness by Standard & Poor's and yields 5.9%. Calamos believes that Ford, the auto industry's low-cost producer, will see its earnings double as the economy comes out of recession in 1993. That should boost the company's stock price 32% to $52. Calamos thinks the convert will share two-thirds of any appreciation. ''With its current yield, this convertible will give you a total return of 26% over the next 12 months,'' he predicts. Investors with less than $50,000 to invest can opt for a convertible bond fund. Sheldon Jacobs likes $327 million no-load Fidelity Convertible Securities (up 19.3%; yield: 7%; 800-544-8888), which has posted average gains of 13% since 1987. Fund experts also praise $195 million Phoenix Convertible (4.75% load; up 14.1%; yield: 4%; 800-243-4361), a safety-conscious fund that has returned a steady 15% annually for 10 years. Another low-risk choice, AIM Strategic Income (yield: 6.6%), a closed-end fund, buys mainly high-quality convertible bonds and preferred stocks from solid growth companies such as Home Depot and International Game Technology. The fund recently traded for $9.25 a share on the American Stock Exchange, a slight discount to the per-share value of its portfolio. Since 1989, AIM's net asset value has grown an average of 10.9% a year. ''We don't hit home runs, but we hit plenty of singles and doubles,'' boasts portfolio manager David Barnard, 44, ''and we've never had a losing quarter.'' For prudent investors, that's a winning game plan in any year.

BOX:

For growth plus rising income, buy stocks that have proven records of boosting dividends.

Since '87, total-return funds almost equaled the gains of growth funds at far less risk.

With growth stocks out of favor on Wall Street today, now is a terrific time to find bargains.