what less accessible. Very few of us have the willpower to resist the temptation that a growing bank account poses. As a result, a lot of people dip into their savings.
"I say 'somewhat less accessible' with a caution, how-ever. Most of the fund families allow you access to your accounts by phone or on-line, making it much easier to switch your money among funds in the family or redeem your shares. Unless you're switching funds within a tax-sheltered account such as an IRA, any switch or redemption will be considered a taxable sale. If you do this too often, it's going to show up quite significantly in your long-term return."
"You said that mutual funds are probably our number one choice for investing the ten percent. What are the others?"
"Dave, my boy, there are literally hundreds of options. You could buy gold, Chinese ceramics, stamps, whatever. But for obvious reasons, those are not good choices. Certainly, mutual funds are almost perfect for our monthly savings—"
"That is, a well-selected mutual fund," I interrupted.
"That is, a well-selected mutual fund," Roy confirmed amiably. "But there is one other viable alternative. Surprisingly, it's the one Tom joked about earlier: real estate."
"How do you buy real estate for two hundred dollars a month?" Cathy and Tom chimed in stereo.
"Alas, with only two hundred a month it may be im-possible, but with four or five hundred, it's very possible.
"Personal loan rates—car loans, for example—are running around ten percent right now. If you borrowed eighteen thousand and amortized the loan, paid it back in