ONE FUND IS ALL YOU NEED

Too bad we got what we wanted, when we started investing our own retirement funds. We wanted choice--lots of different types of mutual funds. We imagined dividing our money among the best of the best--so much in stocks, so much in bonds (if we paid any attention to bonds). For fun, we'd pick the stocks that went up, or our brokers would.

Ha. The world turned, and those who were sitting on top of it suddenly slid off. We learned that we had no idea how to balance reward and risk. Some of us risked too much, and still are dangerously exposed. Others sit fearfully in bank accounts at 1.5 percent. We had plenty of choice and we muffed it. Now we want advice.

So say hello to a fresh idea: the all-in-one mutual fund that has advice built in. The manager splits your money between stocks and bonds, without your having to decide. Just file and forget. More than two thirds of the cash that people added to mutual funds last year went into asset-allocation products, says consultant Avi Nachmany of Strategic Insight. At $150 billion, that's five times more than you invested in 2002.

I love one-stop funds because they save you from irretrievable mistakes. Here's what you get: low fees, if you choose them. Professional stock picking. Enough bonds to control your risk. And automatic rebalancing, meaning the manager maintains the proper ratio of stocks to bonds. That's something you rarely do yourself, yet it's one of the keys to building wealth.

One-stop funds also cuddle up to a human truth: most of us don't want to manage our retirement money. We're inexpert. We're busy. We have other lives. Running a 401(k) is stressful, knowing the stakes.

All-in-one funds provide the management for you--owning the full range of U.S. and international stocks and bonds. They're a new favorite for 401(k)s. You can also buy one-stops through the major fund families. They come in two varieties:

Lifestyle or life-cycle funds, organized around a particular level of investment risk. Your choices range from "very aggressive" (up to 95 percent stocks with a bit in bonds) to "very conservative" (25 percent stocks). The managers will change those allocations from time to time, depending on market opportunities, but not a lot. You have only two decisions to make: how much do I want to commit to stocks and how long should I stick with that particular portfolio. Choice, yes, but pared way back.

Target retirement funds, organized by approximate retirement date. All you have to decide is when you're likely to retire: 2015, 2020, 2025 and so on, up to 2045. These funds grow old along with you. Initially, they lean toward stocks, then turn more conservative as retirement nears. Even so, the managers never give up on growth. They still may be 20 percent to 40 percent in stocks at the target date.

I should warn you that financial advisers aren't necessarily fans. They call these "cookie cutter" funds, and say that you need a planner to tailor your investments (for a fee). But the truth is, one size fits almost all. One-stop funds "already have a financial planner, but you're not paying for it," says Christine Benz, associate director of fund analysis at Morningstar.

Here's how investors should use them:

1. Keep all (or most) of your money there. You might say, "Whoa, I'm supposed to diversify." But one-stop funds are fully diversified already. John Hancock, which offers five Lifestyle funds in its tax-deferred plans, has run a comparison between Lifestyle investors and those who picked similar funds on their own. Between 1999 and 2003, the do-it-yourselfers underperformed the Lifestyle groups by an average of 3.4 percent a year, says Steve Medina, vice president for investment management.

2. Hold down your costs. Other things being equal, low-cost funds beat high-cost funds because more of your money stays in your account to grow. Vanguard charges the least. Its four LifeStrategy funds (ranging from "growth" to "income") run at 0.28 percent a year, and its six Target Retirement funds at about 0.22 percent. Also consider: Fidelity--for Asset Manager and 10 retirement Freedom Funds. T. Rowe Price--three Personal Strategy funds and nine Retirement Funds. American Century--five One Choice funds and six My Retirement funds. Costs range from 0.6 percent to 1.03 percent a year.

3. Compare the stock allocations. All the lifestyle funds classed as "moderate" stay about 60 percent in stocks and 40 percent in bonds. But the targeted funds vary a lot. For investors aiming to retire in 2025, conservative Vanguard currently keeps 59.1 percent in stocks. By contrast, T. Rowe Price holds 84 percent in stocks, for greater growth. Even at retirement, Price stays 44 percent in stocks, in hopes of keeping ahead of inflation. "The biggest risk in retirement is outliving your assets," says manager Jerome Clark. American Century manager Gina Sanchez agrees. At retirement, her funds stay 35 percent in stocks.

So take your pick. Any of these one-stop funds should work better than the muddle most of us pick ourselves. Underneath, they're complex. But to investors, they present a simple and sophisticated choice.