Survey Shows Mutual Fund Investors Are Smart Group.

THE latest statistical portrait of U.S. mutual fund investors makes them look almost too good to be true.

The survey, a joint project of two big financial trade groups, depicts owners of stock funds as calm, patient, well-diversified, reasonably experienced and modest to boot.

A cynic would say the results defy everyday observation. These can't be the same people you see flipping fingers at each other in traffic jams or shoving carts with 19 purchases through the 12-items-or-less line.

Hmm. Could it be that, once the car's in the garage and the groceries are put away in the kitchen, something about investing in a long bull market mellows people out?

Let's inquire. According to "Equity Ownership in America," published last month by the Securities Industry Association and the Investment Company Institute, almost half of all U.S. households (49 million all together, or about 48 percent of the total) own stocks - shares in individual companies, stock mutual funds, or both. Of these, 85 percent, or close to 42 million, own some or all of their stock through fund shares.

The survey, done in January and February among 4,842 households, with a sampling error of plus or minus 2 percent, reinforces the image of fund investors as less wealthy than direct investors in stocks. Their median financial assets, or the number dividing the wealthiest 50 percent from the other half, were $87,500, compared with $125,000 for those who own stock directly.

You want calm and patient? Almost two-thirds of fund owners, 65 percent, said they didn't make a single trade in fund shares, buying or selling, in 1998. Routine events like automatic reinvestment of dividends or regular payroll-deduction contributions to an employee-sponsored savings program didn't count as transactions.

Remember what 1998 was like. The stock market climbed to record highs, then plunged in late summer and early fall as Russia defaulted on its debts and a prominent hedge fund collapsed. It took steady nerves to sit tight.

You want well-diversified? Almost half the fund owners said their money was spread among four or more stock funds; fewer than one in five had all their stock-fund money in a single fund.

What's more, nearly two-thirds of all stock-fund investors have shares of international or global funds. By contrast, only 15 percent of individual stock investors own stocks of companies based in other countries.

You want experienced? More than half, 54 percent, of all fund owners said they made their first stock investment before 1990. Another 29 percent said they first invested between 1990 and 1995. That leaves just 17 percent, or about one in six, who were newcomers to stock investing in 1996 or later.

It's often said that long bull markets make investors reckless, giving them an overblown idea of how smart they are. Well, the fund investors in the new survey don't see themselves that way at all.

Fewer than one in 10 put themselves in the most adventurous category ("willing to take substantial risk for substantial gain"): One in three said "above-average" risk was OK. But almost half regard themselves as average risk-takers at most.

You want modest? Fewer than one in five fund investors described their knowledge of stock funds as "comprehensive." Instead, more than half saw their skills as "basic," and one in four described them as "limited."

If you regard most surveys with suspicion, you won't get any argument here. No matter how skillfully framed the questions may be, it's no easy trick to round up the truth and publish it in a sheet of numbers.

Consider the issue of who's a long-term investor and who isn't. If pollsters call you up, there's not much chance you'll tell them, "No, I'm not a long-term investor. I have a childish, hair-trigger temperament and a limited attention span."

So let's be wary when 97 percent of a survey's respondents say they're long-term investors, and 84 percent say they don't care about short-term market fluctuations.

Nevertheless, there's a lot in this new survey to suggest that investors have a clear idea what the game is about. They seem to be doing what the experts say they should be doing. They're either pretty smart about this whole stock investing business, or pretty good at faking it.

Higher Stakes

If you think saving and investing for retirement is hard, wait until you get to the really tough stuff.

As any veteran of these wars will attest, the heavy-duty challenge is managing your money in retirement, when the stakes go up dramatically and your room to maneuver shrinks.

Before retirement, the abstract question is how much you need to save toward a distant goal. In retirement, the issue gets real - how much income you can take to live on, balancing all the risks posed by inflation, health problems and the ever-chilling prospect that you might outlive your money.

When you're young and planning for retirement, you can bounce back from mistakes, ride out market setbacks and rely on historical patterns and averages as guidelines. Retirees usually lose those advantages.

The big problem for retirees is deciding how much to take out of their investment pile each month.

"The dilemma is that if they withdraw too much, they prematurely exhaust the portfolio," wrote Philip Cooley, Carl Hubbard and Daniel Walz of Trinity University in Texas, in the AAII Journal of the American Association of Individual Investors. "But if they withdraw too little, they unnecessarily lower their standard of living."

Always remember, fund firms and other financial companies aren't disinterested observers on this subject. They have products or advice, or both, to sell to anybody who's retired or ever hopes to be.

Even so, they can be useful sources of information on retirement planning and money management. Fund groups like the American Funds, Alliance Capital and Strong Funds have posted calculator programs on their Web sites to help you figure where you stand.

At its site, Fidelity Investments, the biggest of all fund firms, offers a "personal retirement review" service, including a meeting with a consultant, for anyone approaching retirement with $100,000 or more to invest.

Suppose the average life expectancy for people your age is eight years. You cannot simply use that number. "By definition, you have a 50 percent chance of living beyond your actuarially determined life expectancy," Profs. Cooley, Hubbard and Walz point out.

So if you're planning for retirement now, don't look at it as a task unto itself. Consider it a warm-up for the serious job to come.

Chet Currier is a columnist with Bloomberg News.