The Volds' goal: A safer investment plan that saves for college

Todd Vold, 38, a business consultant, and Lisa Vold, 39, a stay-at-home mom, of Newcastle, and their kids Ryker, 4, and Mason, 6. They rode a rollercoaster in biotech-stock options only to lose nearly all of it, and now are unsure what to do with their remaining money. Their income this year: $104,000.

What they have

The Volds parlayed $50,000 into more than $500,000 before losing nearly all in the 2002 stock-market crash. They dug themselves out of the options hole — they owed $200,000 at one point — thanks to two homes they fixed up and sold in Colorado, before moving to Puget Sound.

They still have $70,000 in IRAs invested in a broad array of mutual funds and $36,000 in a low-earning money-market fund. But they're nervous about putting those funds back into the stock market.

Goal

Make a less risky investing plan that saves college money for the boys.

Advice

Kirkland-based certified-financial planner Robin Tan doesn't fault the couple for trying out some riskier investing strategies while young. They did end up in a house worth $650,000, despite their losses playing the stock market.

But he came up with a more conservative strategy for them now:

Diversified-investment plan: This includes a mix of 80 percent stock funds, 20 percent bonds. Within stocks, they'll diversify to have a mix of funds including large-, mid- and small-cap stock funds with both growth and value orientations, international funds, and real-estate investment trusts (a REIT is a company, often with shares traded on a stock exchange, that manages a portfolio of real-estate holdings).

College: With $22,000 already put away in a tax-free Colorado state 529 college-savings plan the couple funded before the tech crash, investing just an additional $75 per month per child would allow the Volds to provide about 40 percent of the kids' college money. "This would give us enough to feel we're really helping them," Lisa says.

Now that they're not paying Colorado state income tax, the Colorado 529 isn't necessarily their best college-savings choice. Tan recommends they explore other 529 plans, or consider the Washington GET, which prepays future tuition and fees at today's cost.

Tap the free money: With Todd becoming eligible to participate in his new employer's 401(k) this year, he plans to contribute $10,000 — nearly twice what he had planned before meeting with Tan. Todd's employer will contribute about $500 of matching funds.

Putting most of the new savings in Todd's 401(k) isn't much of a risk for a nonworking spouse such as Lisa. In a divorce, Tan notes, a court typically awards the spouse half the money accumulated during their marriage.

Emergency fund: The Volds should put $15,000 of their $36,000 money-market account — three to four months' worth of expenses — into a high-yield savings account earning about 4 percent. That's a better return than the money-market fund is getting. One of the couple's goals was to reduce their feelings of financial stress and having this rainy-day fund ought to do it.

No early retirement: Todd Vold hoped to retire at 55 but Tan recommends he work to age 62 to ensure the couple will have enough funds for their planned retirement lifestyle. They hope to travel and own a vacation cabin.

Cabin fund: They should set up a separate savings fund targeted for that goal. They'll start by putting $1,500 a year in the account.

Risk-management department: Todd should up his life insurance from $600,000 to $750,000. Lisa should increase hers from $250,000 to $500,000.

The report card

SPENDING: A

SAVING: B

INVESTING: B