Entrepreneurial spirit.

Independent literary agent eyes financial freedom

Marlene Connor Lynch is married to her job--plus she has a husband, two young children, a home, and a flourishing business. An aggressive self-starter, she is aware that saving for the future is critical, but she is not among those who are counting down the days until retirement. "I suppose I care about retirement, but I don't think my business is age sensitive," says the 40-something, Minneapolis proprietor of Connor Literary Agency, which she started in 1985.

Her career has had to be part-time while she and her husband, John, 37, work full-time raising their two sons, Reginald, 5, and Maxwell, 3. John, who holds a master's degree in psychology, is starting his own counseling agency.

Marlene expects to work until a ripe old age, but about seven years ago decided to start an investment portfolio to ensure her family's financial future and reach her goal of one day becoming rich.

She started out with approximately $5,000 and at intervals invested additional funds in stocks such as Coca Cola (NYSE: KO), Microsoft (Nasdaq: MSFT), Intel (Nasdaq: INTC), and America Online (NYSE: AOL). "I am not a gambler," she says. But, by taking some calculated risks, she has grown her individual stock portfolio to more than $150,000. Now, aggressive-growth stocks, like e-business consulting and developing company Proxicom Inc. (Nasdaq: PXCM), can be found amid her conservative core holdings. Moreover, her $30,000 mutual fund portfolio consists of no-load funds from the 20th Century and Janus fund companies. Although she calls them "boring" compared to individual stocks, she recommends them for first-time investors who have a small sum to invest like she did, and want to hedge against volatility.

Profiting from the stock market was just one source of financial security, she realized. Two years ago, she contacted a financial planner at American Express IDS funds--independent from her stock broker--to get a full range of life insurance and retirement services to supplement existing benefits she had accumulated from past employers. Prior to her discussion with the financial planner, she had been investing $50 a month in a 5% fixed-rate annuity, and later increased the monthly contribution to $150. More recently, she converted to a variable-rate annuity, which is now valued at $22,000. By contributing an extra $13 a month, or $156, she is able to fund a disability insurance plan and a universal life insurance policy, from which a portion of the dividends are invested in a mutual fund for college tuition.

With aggressive investment and savings strategies in place, and a lot of discipline, Marlene and John are optimistic about overcoming the growing pains of their entrepreneurial careers. "I think you should develop your career in such a way that you are not planning everything [for retirement]," Marlene said. "I am just planning to have enough money for when I am old."

Expert Advice

Financial Expert: Marc R. Lippman, a vice president at First Union Securities in Tysons Corner, Virginia.

Lippman's Recommendations: Maintain a diversified portfolio, and maximize her retirement.

Use margin capabilities: Marlene has borrowed 15% of her individual stock portfolio's value to buy additional shares in some of her "iron-clad" positions, such as Intel. At 10% annual interest, this is a useful strategy for growing her portfolio, or funding other personal needs.

Explore "Holdrs": Lippman suggests Marlene consider a 20% position in Holdrs--a grouping of about 20 stocks packaged under one ticker symbol that trade on the American Stock Exchange.

Expand sector exposure: Lippman suggests Marlene use financial stocks to balance out her exposure to technology-laden names. He suggests she look for an entry point with such industry leaders as American Express (NYSE: AXP), and Mellon Financial Corp. (NYSE: MEL).

Upgrade her traditional IRA: In converting her $35,000 traditional IRA to a SEP (Simplified Employment Pension Plan)IRA, Marlene has the flexibility to contribute more than the $2,000 annual minimum of a regular IRA. She can invest 15% of her annual income up to a maximum of $30,000.

              Household Income
Gross Income/1999            $60,000-$75.000

                Investments
Individual Stocks                   $150,000
No-Load Mutual Funds                 $30,000

             Retirement Savings
IRA                                  $35,000
Annuity                              $22,000

TIAA/CREF/vested with Doubleday       $9,000
Personal Savings                      $5,000