An Investment Plan Just Right for Newlyweds : Strategies: Mutual funds are a good choice because they are diversified, professionally managed and inexpensive.

So you survived the wedding and honeymoon with a few dollars left in the bank.

Perhaps you even received some cash gifts from friends and relatives, or some duplicate juicers or Crock-Pots that can be returned for a refund.

If so, it might be time to sit down with your new spouse and map out a financial strategy--one that might involve mutual funds.

The investment problems facing newlyweds are a blend of short-term needs and long-term goals. On the one hand, couples often must scrimp and save to come up with the cash to make a down payment on a home and to purchase furnishings.

On the other, they might want to start putting aside money to compile an emergency cash reserve, educate children and even prepare for retirement.

Mutual funds make good choices for newlyweds because they are diversified, professionally managed investments that can be purchased for modest sums--typically, $500 to $2,500 or less.

Funds cover a range of investment choices, from low-risk money market portfolios to aggressive stock market products. “Mutual funds are an ideal way for young couples to get diversification, especially if they don’t have a lot of money,” says Shelley Freeman, director of personal financial planning for Shearson Lehman Bros. in New York.

With a higher combined income, newlyweds have more opportunities to build up wealth.

Laura Lee Wagner, a certified financial planner with IDS Financial Services in Phoenix, tells of a couple who came to see her in 1989, while still engaged.

Both individuals drew good salaries as engineers, but they also had some costly financial goals that included paying off credit cards, buying a home, planning for an early retirement and helping to pay the college bills of the woman’s brother.

The couple first paid off their credit card debt, built up a cash reserve equal to three months of expenses, helped the brother and bought a $165,000 house.

After that, they turned their attention to long-term wealth creation, using mutual funds as a cornerstone for their retirement-oriented accounts. Wagner recommended that the couple follow a dollar-cost averaging strategy that has them investing about $1,350 a month in three stock funds, an equity-oriented variable annuity and some fixed-income products.

The result has been a steady increase in assets. “The couple’s net worth was $47,000 when they started,” says Wagner. “Now it’s $130,000.”

Dollar-cost averaging, available through most mutual funds, involves putting money away on a regular basis--perhaps $100 or $200 every month or quarter. The easiest way to accomplish this is to have the cash taken directly out of your checking account.

Dollar-cost averaging works particularly well for newlyweds because it forces them to invest without straining their finances, Freeman says. “It makes savings easy, and those assets can really grow over time.”

Another important benefit of averaging is that investors don’t have to worry about risking everything at what could turn out to be a market high. “I won’t put a large lump sum into stock funds anymore,” Wagner says.

Kathleen Crowley, a vice president at Stratford Advisory Group in Chicago, recommends that newlyweds maintain six months’ worth of income as part of their emergency cash reserves. They might want to place the cash in a money-market portfolio that allows check-writing privileges. And for the house down payment account, either a money-market portfolio or a short-term bond fund would work well, she says. But for longer-term growth, including college and retirement planning, Crowley agrees that newlyweds should focus on stock funds. “The mistake younger people often make is that they go with bonds because they think they’re safe,” Crowley says. “Stock funds allow your money to compound much more substantially.”

She recommends an equity-dominated strategy made up mainly of blue chip stock funds, with some international and small-company portfolios thrown in.

A Financial Checklist for Newlyweds

Recently married couples can do well by building a long-term investment plan around various types of mutual funds, especially stock portfolios. But they should also pay attention to other personal-finance issues, including the following:

* Insurance: Perhaps their most pressing financial concern, newlyweds should make sure they have adequate but not duplicative medical, life, auto and property coverage. They might also consider disability insurance.

* Credit: Both spouses should have at least one credit card in their own name to establish a good record.

* Taxes: Combined paychecks could push a couple into a higher income bracket, making tax-sheltered retirement plans and even municipal bonds or bond funds more attractive.

* Estate planning: If one spouse died unexpectedly, assets brought into a marriage, including mutual funds, might not pass to the other spouse unless properly titled. Wealthier couples should also examine the tax-savings implications of estate planning.

* Retirement planning: Couples should take advantage of company retirement programs to maximize the tax-sheltering benefits. It’s important to realize that one spouse’s participation in a company plan could destroy the other’s ability to deduct IRA investments.