correspondent wrote this week: ?I am a 20-year-old male looking to get rich as fast as I can, even opening my own business someday. I have a five-year CD (certificate of deposit) that is getting 5.25% on interest at the moment, which will be due next year. I try to put about $500 a month in the CD, just to have some kind of savings. I was wondering what should I do with the money when it comes out. Should I use it to start a business or should I roll it over ? if I do, the interest will be three percent. I really want to be financially stable some day.?

This is the most heartening letter I have ever read. Someone is thinking ahead at the age of 20. If it?s a five-year CD, and he?s 20, he was 17 when he set it up. Now, there?s a guy that?s going to be financially stable well before his retirement age.

I don?t offer specific advice, even to friends, but I do discuss general principles.

Starting a business, it seems to me, is not so much a matter of whether the money is available, but whether the business plan is available. Chickens or eggs may come first in riddles, but the business plan comes first in real life.

It can sound daunting, that combination of two ugly words, business and plan. Such a document is relatively simple to prepare, however, and will prove to be one of two things: a roadmap to success, or the reason to bail out before starting what economics suggests (or your bank tells you) will be a bad idea. The business plan answers the questions: what will the business do to make money? Who will its customers be? How much will it charge for its products or services? What will all this cost? And, how will I or we finance this business? The process forces the preparer to think deeply about the nuts and bolts of starting a business, and teaches all manner of useful lessons.

The second thought that the letter prompts is: choices. The writer offers himself a new business or a CD roll-over, but no other investment alternatives.

If he plans to start a business when an idea presents itself, and his plan suggests that he will need all or most of his savings from time to time until the business is on its feet, the money should be reinvested in such a way that it is available when needed. Money should always be invested that way.

I never met an idea in which I would invest all my savings, because I?m not that kind of guy. There has never been a time when I would bet it all. That may be why I?ll never be fabulously wealthy, but I am pretty well acclimatised to the idea, so that?s OK. My correspondent, with his youth, is in a different place and probably of a different mind-set.

On the CD side, rates above three percent are available in the Bermuda market to those who shop around. Term is important, too. Lock it away for too long and you take a specific risk, that rates will rise, but your investment won?t. You can do well on the flipside, of course, as my correspondent has, pulling down 5.25 percent in the past few years, but that?s a risk I preferred not to take.

I?m guessing that my correspondent has no other assets of any significance. In that case, one idea, if the money can go away for a period of five years or more, would be for my correspondent to take a third or more of his maturing CD next year and buy some equities with it, via a mutual fund, probably with the bank. An investment in a well-managed fund made at the age of 20, of even a few thousand dollars, would be a handy thing for a young lad to have, when he wants to buy his first house, or better still, if he doesn?t touch this branch of his capital until retirement age, when time and compound interest will have worked serious magic. With duration of ownership comes a chance to outrun a bad year or two. In the long term, and in this case the very long term, stocks almost always prove to be a good idea.

My correspondent, like anyone else, should periodically look into his future and think in a balanced way about what it holds. He should think about building his asset base, and taking on that degree of risk with which he is comfortable. He should balance his investments in a mix that also keeps him happy. For some, that means all cash, as it did for me until about four years ago, when I started to put my money, ho ho, where my mouth was. I left it too late, given what I should have done at 20, but in fact it?s never too late.

Look into your heart first, I always say. What is it you want from life, and how do you want to make your money work for you, rather than against you? Then look into your head and think how to do it in such a way that you balance risks with rewards. Educate yourself. Read a book or two on how to build wealth. Talk to your banker. Visit a stockbroker and ask his or her advice. Learn to think first what your options are, and then to decide which one you like best. The more educated you become, at 20 or any age, the likelier you are to make good decisions.

I?m co-opting a phrase from my correspondent to update this column?s vision statement. It now reads: ?Getting rich slowly: I really want to be financially stable some day.?

Next week, we?ll look at the results of you filling out the little boxes on your spending charts, and give latecomers a chance to join in.

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