July 6, 1997

Q. I am 24 and work as a production supervisor, earning $24,000 a year and working about 60 hours a week. My goal is to retire with at least $1 million. I have about $50 a month to invest. I have heard that if I put money in an IRA until I am 59 1/2 years old, I will have a couple hundred thousand dollars. Will $600 a year put into an IRA bring me to my goal, and what kind of IRA would you recommend? Can you outline an investment plan where I can put my money to work -- with no fees or very limited fees and with very low risk? I hear that Fundamental Investors and Washington Mutual are good fund choices.

N.P., Hemet, Calif.

A. The bad news is that $50 a month certainly isn't enough to get you to your goal. But it's also reasonable to assume that you won't be earning $24,000 a year forever, and as your income increases, you can add to your retirement savings.

Here are a few projections: If we assume you put your savings into a stock mutual fund that returns an average of 10 percent annually, a $50 monthly savings schedule would bring you a $178,910 pool by age 59 1/2; the total would be $306,065 by age 65. To attain a $1 million retirement account by age 59 1/2, using the same assumptions, would require monthly contributions of $279, which is probably far out of sight, at least at this point.

If you were able to reach the maximum current IRA contribution -- $2,000 a year, or $166 a month -- the pool would grow to $596,344 by age 59 1/2 and slightly surpass the magic target by age 65, with a balance of $1,020,176.

Both of the funds you suggest are solid, although Washington Mutual would be my choice, based on a lower risk score from Morningstar Mutual Funds and a better long-term record. But it's only fair to say that neither of these, nor any other stock fund, can be fairly represented as investments with ``very low risk.'' Under normal circumstances, that term should be limited to much more sedate investments than stocks.

But when you have such a long investment time frame -- more than 35 years -- what constitutes heavy risks in the short term becomes quite moderate. To my way of thinking, the overwhelming odds are that the climbs will far exceed the declines over such a long period. Both of the funds you propose allow minimum investments of $250, but neither is a no-load fund; both make sales charges of 5.75 percent. I suggest you ignore this: Over the course of 35 years, that up-front charge is quite unimportant.

If you're determined to avoid loads, however, many no-load funds offer IRA accounts with minimums investments of $500 to $1,000.