Setting an Investment Strategy That Grows With Assets.

DISCUSSIONS of money too often leave out the amount.

We speak here not of commonplace unknowns like a co-worker's salary or your in-laws' net worth, interesting as those subjects may be. Our concern today is with asset allocation models and other investment recommendations that aim to help you manage your assets.

These discussions customarily take pains to account for some personal variables -- the investor's age and temperament, for instance. They usually give short shrift, though, to the size of the account.

That's a big omission. In the human psyche, the amount to be managed exerts a powerful influence on how one approaches the whole problem.

Think for a moment of the game show "Who Wants to be a Millionaire." The decision whether to keep playing or to take the money and run is a whole different emotional proposition at, say, the $125,000 level than it was at $2,000 or $4,000.

So too with one's nest egg. The investor who bravely plunges into aggressive growth funds with $10,000 or $20,000 quails at figuring out what to do with a $100,000 or $200,000 retirement plan distribution.

Help!

This is the reason you always hear why today's mutual fund investors are so eager to pay brokers or financial planners to advise them, even when they're investing in no-load funds. Ten years ago, according to the consulting firm Financial Research Corp. in Boston, investors made 31 percent of their investments in long-term funds directly through the funds. Now, after a bull market that made many people richer, direct investing's share is down to 18 percent.

No question, it makes sense to take more care about protecting your capital as the amount of that capital grows. Also, the options open to you increase once your stake reaches a certain size: real estate, separately managed accounts, hedge funds, that sort of thing.

Even so, I believe it's possible -- no, make that entirely workable -- to invest in funds with a strategy that stretches to almost any size, and doesn't have to be drastically reworked just because it succeeds.

You start with a disciplined plan that allows for expansion from the outset, rather than buying funds helter-skelter. One possible guideline is the "core and explore" system that Charles Schwab & Co. describes on its Web site at www.schwab.com. I'm not slavishly following that model here, just using it for inspiration.

In the beginning you ignore the hottest aggressive-growth funds of the moment. Instead, you pick funds for all seasons, basic building blocks that can serve as cornerstones of your plan no matter how big it gets. Examples to consider: the Vanguard Total Stock Market Index Fund; the TIAA-CREF Managed Allocation Fund; or possibly a stock-bond combination along the lines of the T. Rowe Price Balanced Fund.

You also include in your plan two or three money-market funds managed by big, high-visibility firms. Yield, while a factor to take into account, is only a secondary concern here. You want a fund that is unlikely to get into trouble, and likely to be rescued by the powers-that-be if, heaven forbid, trouble ever strikes. Examples: the Vanguard Prime Money Market Fund, Fidelity Cash Reserves.

That gives you all you need to work with for a while. Then, when your holdings approach a milestone such as $50,000 or $100,000 -- the latter is often described as the "help!" point for the typical helter-skelter investor -- you don't need to panic.

Heck, you're just getting started. Now, with your "core" solidly in place, you can do some serious exploring" in aggressive-growth funds, biotechnology funds, emerging markets funds or whatever else strikes you as a great growth opportunity.

Remind yourself that the basic purpose never changes. All you want to do is seek growth of your money while protecting yourself to a reasonable degree against unhappy surprises. Loss of principal in a falling stock market, which we've experienced in living color lately, is only one of the risks. Another is that your money won't stretch far enough in your later years to assure you a comfortable old age.

When your plan starts feeling too dangerous, keeping you awake at night, consider building up the core. When you want to be more adventurous, put more emphasis on the "explore" funds in your plan.

At some point, it's quite possible you'll want to bring in hired help. But financial advisers have no magic potions to offer.

What a good one will give you for your money is a solid, expandable money-management plan. If you've been working from a sensible strategy since you started, that would mean nothing more than a professional version of what you're already working on.

Chet Currier is a columnist for Bloomberg News.