A BRIGHT FINANCIAL FUTURE.

Gen-Xer Marene Jennings is keen about reaping the benefits of long-term investing

MARENE JENNINGS, 24, IS GREEN TO THE JOB MARKET, but she isn't new to saving. Jennings, an economics major who graduated from Dartmouth College in 1998, has been diligent about saving her money since elementary school. "I always did chores, which I would get paid for, and during holidays family members would give me money instead of gifts," says Jennings, who grew up in the Bronx, New York, with her mother. During high school, she pumped up her personal savings account--which totals $4,000 today--with earnings from summer jobs and a yearlong gig at a shoe store.

Most recent grads are over-burdened for years trying to pay back school loans. Jennings, however, owes only $4,000, thanks to a scholarship, financial aid, and contributions from her mother. But she is also quick to point out: "I've always paid more than the minimum payment due [often double the amount]."

Jennings recently landed a position in the strategic new business development office of a Boston-base mutual fund company. In addition to a Fidelity brokerage account, valued at around $7,000, she also has about $8,000 saved in an IRA, to which she contributes $2,000 a year (the maximum allowed). "I have been contributing to the Fidelity account ad hoc, whenever I have extra [cash], mostly my bonus money," she says. In addition, she has $100 automatically deducted from a checking account every month and deposited into two tax-managed mutual funds, valued at $4,000. She also contributes 10% of her $70,000 salary to her 401(k).

Jennings' money is invested mostly in equity mutual funds. "I didn't feel like I had enough time to research individual stock," she says, "but I was comfortable with and knew enough about mutual funds."

THE ADVICE

Marene Jennings' challenge is to preserve and appreciate her capital and to plan for the future, which includes applying for an M.B.A. BLACK ENTERPRISE introduce Jennings to a financial advisor who could help her adjust her asset mix and assess her chances of getting financial aid to pursue a postgraduate degree. Gail Perry-Mason, first vice president of financial services with First of Michigan, a division of Fahnestock, offers the following recommendations:

* Apply for scholarships, grants, and fellowships. Jennings' investment income is likely to prevent her from qualifying for "needs-based" financial aid. She should start doing her homework by researching programs (www.scholarships.com) that are based on merit to pay for graduate school, such as those available through independent foundations and organizations such as the Consortium for Graduate Study in Management (see "This Way to an M.B.A.," February 2000).

* Create a stock portfolio. Jennings should use the $2,000 she won through the financial fitness contest to begin investing in stocks. Since she has more than 30 years until retirement, she can afford to be more aggressive. "She can create and manage her own mutual fund by starting out with four companies in such sectors as utilities, retail, consumer goods, and financial services," says Perry-Mason. Companies worth considering: Nike, Kimberly-Clark, and Bank of America. To save on commissions, Jennings should invest via direct stock purchase plans (see "Direct Approach," Moneywise, this issue). She should contribute $100 a month to her stock portfolio.

* Consolidate savings accounts. Jennings has $4,000 in her childhood savings account and $1,000 in a money market account. She should keep all of her short-term funds in the money market to garner a higher rate of return. For now, she is getting a competitive rate, but she can always check who's offering higher rates at Websites such as www.bankrate.com and www.rate.net.

* Create and follow a budget. Jennings says she maintains a sense of what she spends each month in her head.

"The only true way you can know how much you spend and where you can save is to have a written budget," cautions Perry-Mason. "This way you can see: `I wasted money this month in ATM fees because I took too many trips to a machine not belonging to my bank, or I paid X amount of dollars in late fees for movie rentals.'"

By following a budget, Jennings can better assess her day-to-day needs vs. her educational and investment needs. By cutting costs and getting rid of any wasteful spending, she will be able to contribute even more discretionary income to her investments. Also, Jennings' weakness is that she likes to shop. A way she can save--and earn--more money is to review fashion products at www.mysteryshop.com.

* Reallocate asset mix. Following the rule of 100 (subtract your age from 100 to determine what percentage of your portfolio should be invested in equities), 24-year-old Jennings can afford to invest about 75% of her money in stocks, 20% in moderate vehicles, and 5% in cash.

The $8,000 in her IRA is invested in a blue-chip fund; she should roll over that money into a Fidelity IRA account to eliminate paying custodial fees. Also, she should pay more than the minimum on her student loans--but not twice as much. Then, use the extra money to invest monthly in the Fidelity mutual fund account.

Financial
Snapshot:
Marene
Jennings

HOUSEHOLD INCOME

Gross Income:   $70,000

ASSETS

Checking           $250
Savings           4,000
Money Market      1,000
IRA               8,200
401(k)           13,000
Mutual funds     11,000

TOTAL           $37,450

LIABILITIES

School loans     $4,000

TOTAL            $4,000

NET WORTH       $33,450