Q. I'm a security officer with income $ 30,000 a year. I don't have a retirement plan. All my savings I invest in bank CDs or I Bonds. I'm 29 years old now and have $5,000 in bank CDs and  $14,000 in I Bonds. What do I have to do to allow me to retire at 60?

----V.C., by e-mail



A. To retire at 60 you'll have to take some very big chances. First, you'll have to assume that you'll have medical insurance or that you'll have no serious medical problems between age 60 and eligibility for Medicare. Second, you'll have to assume that you won't outlive whatever money you accumulate in the many years of retirement that will stretch ahead of you at 60. Finally, you'll have to assume that the age to start receiving Social Security benefits won't be extended from 62 to another age. You'll also have to assume that the benefits won't be reduced. How?  By moving the age for "full" benefits beyond the 67 years now scheduled.

Those are big bets and the deck is loaded against you.

But don't be depressed.

You also have some things working in your favor. One is that you can, and do, live modestly and save money. Many of the people who earn two and three times what you earn can't save.

Another, if you are willing, is that you are young enough to explore alternatives to the high cost of traditional living patterns. Suppose, for instance, that you bought (and paid for) an inexpensive condo with low expenses. It could reduce your monthly income requirement. There are also people who live, full time, in RVs. This would allow you to reduce your shelter expenses still further. Your taxes would be negligible, your ground rent would be small, and your utility bills would be tiny.

The size of the average new home has doubled in the last 50 years. Think of it as Shelter Inflation. But you could decide that your personal freedom is more important than floor space.

Another major living expense is transportation--- if you insist on having your own automobile. Eliminate having a car and your committed monthly expenses will be much smaller. I could go on, but I think you get the idea: organize your life for personal freedom and your expenses will go down.

Note that I have not mentioned savings and investment. That's because your personal decisions about spending are more powerful levers. If I were you, however, I would not devote 100 percent of my savings to fixed income investing, even if it is inflation protected. You could start by investing about 25 percent of your savings in a broad index fund, such as Vanguard Total Market Index. Stocks have provided a long-term real (after-inflation) return of around 7 percent. I Savings bonds are only providing a real return just over 1 percent. So, stocks could be very disappointing and still do much better than inflation-protected bonds.

 

Q. Is there an exchange traded fund (ETF) or mutual fund that invests exclusively in China?

L.E., by e-mail

 

A. Not really, although there are many with exposure to China and its growth. Currently there are no domestically traded exchange traded funds that invest exclusively in China. Similarly, few of the open ended and closed end mutual funds that invest in the area are 100 percent commitments to China.

Instead, they invest in companies that do extensive trade with China, often through the Hong Kong market. One example is Fidelity China Region (FHKCX), a $240 million fund in operation since late 1995. Most of its investments are in Hong Kong. You might also take a look at Matthews China Fund (MCHFX), an $88 million fund in operation since early 1998 with about 40 percent of its investment in China and somewhat more in Hong Kong.

Some 34 Chinese companies now have shares listed on the New York Stock Exchange so you can buy shares domestically and track their performance easily. You can follow an index of these companies--- and see a list of the companies in the index--- by visiting www.usxchinaindex.com. The companies range in market capitalization from $83.5 billion (Petrochina, ticker: PTR) and $66.4 billion China Mobile Hong Kong (ticker: CHL) to several with market capitalization under $100 million.