(MONEY Magazine) – Conventional wisdom can be treacherous. For instance, you've probably heard that when you invest for retirement, you should be very aggressive while you're young, then buy more bonds and fewer stocks as you age. Mutual fund companies have reinforced that idea by offering so-called life-cycle funds that emphasize bonds for older investors. I'm convinced, however, that chasing high-flying stocks while you're young and later switching to low-yielding government bonds is a formula for becoming a thousandaire, not a millionaire.

Here's why: Many brokers contend that young investors should swing for the fences, taking outsize risks in hopes of reaping substantial gains. Sure, they could lose everything, this argument goes--but they've got plenty of time to make up lost ground. The trouble with that strategy is that it overlooks the extraordinary effects of compounding. In fact, if you waste your youth making speculative investments that don't pay off, you may very well not have enough time left to rebuild your retirement stake.

To illustrate the power of compounding, let's say that you put $2,000 into an IRA every year starting at age 25 and reap a tax-deferred compound yield of 11% (roughly the average annual return provided by stocks since 1926). If you don't put in another penny after age 35 and simply leave the stash alone until you retire at age 65, you will have $895,612. By contrast, if you start investing at age 35 and contribute $2,000 annually for the next 30 years, even if your investments net that same 11%, you'll wind up with only $443,826.

To make sure compounding works for you, I believe you need to set up a retirement portfolio of dependable blue-chip stocks as soon as you can. Big growth issues won't knock your socks off but will produce steady gains over time. Consider starting out with shares of pharmaceutical companies, energy firms, big muscle banks and behemoths in other essential industries. Or invest in an index fund that tracks the S&P 500.

Then you can hunt for 10-point stags lurking in Wall Street's forests, if that's your itch. After all, with blue chips backing you up, you won't risk your retirement security if all you bag is a couple of squirrels.

AS YOU NEAR RETIREMENT. Traditional chatter says that as your career winds down you should strive to preserve wealth and stop worrying about increasing it. That's wrong. Yes, you'll probably have the mortgage paid off, and the kids will be out of college. But some costs will likely rise in retirement, including travel, entertainment--and medical care. Plus, inflation will continue to take its toll. Then too, you probably expect to live more lavishly than your parents did. So wise investors assume they'll need more dollars at age 85 than they will at 65. That is why financial planner Michael Chasnoff, president of Advanced Capital Strategies in Cincinnati, recommends that whether or not they've stopped working, most of his clients keep 60% in equities.

--HENRY WEIL

Henry Weil is a former editor of the Retire with Money newsletter.