Q. I am a 28 year-old salesperson and my fiancée is a 25 year old teacher. Our combined income is about $140,000 annually depending on the kind of year I have. We have begun our 401k and 403b plans which are maxed out and also have started our separate Roth IRAs. My fiancée also has a mandatory teachers retirement plan currently worth about $4,000. Our marriage is this summer (2000) and we plan to have $9,000 of consumer debt paid off by then. Our only other obligations will be a $1,000 mortgage payment and a $467 car note for 18 months.

Can she come home in a couple years to be with our future children? That would leave our income at about $110,000 to $130,000 a year. Are we being realistic to think she can? Secondly, all we hear about is investing for retirement, but never for current income. It will be great to "live a little" when we are 65 to 70, but what about when we are 40 or 50? We would like to enjoy ourselves and family then too. What can we also be doing now not only to ensure a bright financial future but also to provide us with income?

---D.B., by e-mail.

A. First, some perspective. Assuming your income, alone, is about $110,000 you have the earning power of two median two-earner couples. It may seem that everyone earns more than you but, trust me, they don't. Your decision isn't fundamentally economic--- a working spouse isn't an absolute necessity to provide bread and shoes. Your decision is about how you will use the resources you have. You can use your income to have a spouse who stays at home to raise the children and manage the household or you can have a spouse who works and earns.

In fact, many high-income earners find that a working spouse can add more to the family standard of living by being a homebody. The economics are simple: when you add a second income you pay income taxes at high rates and incur all the expenses of a second income both at work and at home. Unless the income is substantial, the net contribution is likely to be worth a whole lot less than what can be achieved at home.

This is not hyperbole. If you want to learn more, you and your wife should read a book by economist Linda Kelley, "Two Incomes and Still Broke?," in which she shows the real costs of having a second worker in a family. (You can also read my column on the book)

Investing so you can have more money to spend is a "can't get there from here" problem. If you have an investment that provides a 7 percent annual yield, you'll need to invest 14 times as much money to get the yield. When you consider income taxes will take 31 percent, you need save $20 to have $1 of spendable investment income. In the short term, that means you need to put an awful lot of money aside to increase your spending power by very little.

That's why most of what you read about investing concentrates on retirement: it is looking to the day that you have enough money working for you that you don't need to work anymore. While most people choose to think about retiring at 55, 60, or 65, there is nothing to keep you from thinking about retiring earlier or using income from your investments to reduce the amount you need to work.

Q. An article by Michael Sivy in a recent issue of Money argues that index funds are no longer a good idea because (1) many stocks are ridiculously expensive while others remain reasonable--- why own them all? And (2) historical evidence would indicate that single digit returns are likely for the market for the next decade or longer. Sivy says that a reduced number of high quality stocks will increase the probability of returns that are higher than the market's. Would you comment?

---J.B., Dallas, TX

A. Index investing is a bit like Winston Churchill's description of democracy--- "a terrible form of government, except compared to everything else." While many would agree that a handful of very large capitalization stocks have been accounting for virtually all gains in the S&P 500 Index, the moment you leave indexing you are confronted with the issue of which "high quality stocks" you should own instead of the index. Once you get back to either picking stocks or picking a professional stock picker's mutual fund, you're back in the odds game. It's always fun to play the game--- but the odds against beating the major indices remain very high.