July 13, 1997

Q. I am 39 and would like to have about $1 million for retirement. I now have $11,000 in the T. Rowe Price Blue Chip Growth fund, plus IRAs of $6,500 in Janus Growth and Income fund and $28,000 in Vanguard's Windsor II fund. Do you think I need a bond fund such as Vanguard's Total Bond Index?

N.B., Santa Clarita, Calif.

A. No. The bond market may look attractive when the stock market seems so high that there's little apparent room for further growth. But over the long haul, stocks should significantly outperform bonds, and the latter shouldn't have a place in your retirement portfolio until the years just before retirement. Moreover, not only will you have to work your money hard to reach that magic $1 million by age 65, but you'll probably have to save a bit more even if you invest entirely in stocks.

I calculate that the taxable savings program with T. Rowe Price Blue Chip Growth should grow to $268,095 by age 65, presuming continued $100 monthly contributions and 10 percent average annual growth. Presuming further that you make the $2,000 maximum IRA contributions each year until age 65, those accounts should grow to $639,493 by age 65. This leaves you about $93,500 shy of the $1 million target. To bring the accounts to that level, you would need to add $67.50 a month to your taxable savings program. What's more, you would have to pay from other funds any tax liabilities generated by the taxable account.