Young investors have time to alter course, build assets. RETIREMENT PLANNING

For a young person trying to get a head start on investing for retirement, time is definitely money. There's time to try new investments, ride out the ups and downs in the market, and make major adjustments every few years. ``You can take an aggressive investment strategy at an early age,'' says Christopher Feiss, an analyst at Fidelity Investments.

``Losing a few thousand won't be a real setback in the long run,'' Kevin White, a broker at Kidder, Peabody & Co., says.

Buying stocks in a big, well-known company or going the way of a mutual fund - even with only a small amount - can reap large capital gains five to 10 years down the line, growth that wouldn't necessarily come in one or two years, Mr. Feiss says.

To illustrate the effect of time: If you put $2,000 each year into an individual retirement account or even a tax-deferred fund, starting at age 25 and earning an average of 10 percent per year, you could retire with well over $1 million.

No more than 20 percent of a young person's spare cash should be put into investments that promise only steady income (from dividends and interest), writes Adriane G. Berg in ``Your Wealth-Building Years'' (Newmarket Press, New York, $8.95). The other 80 percent should be aimed at growth, recommends Ms. Berg, a lawyer and financial planner.

That isn't to say young investors should be reckless and ignore their future, or their present. Everyone should save at least three months' worth of after-tax income as a cushion for emergencies, and should have adequate life insurance, says Peter Ward, vice-president of communications at Massachusetts Financial Services in Boston.

No matter what your age or income bracket, you should also be planning for retirement by investing in one of four types of retirement accounts: IRAs - the most popular - annuities, and savings bonds or some other zero-coupon bond.

The IRA is a relatively painless way to save if you start early. While tax reform has taken away the ability to deduct the maximum $2,000 annual contribution from your income, the interest still builds up tax-free until retirement. And because you can invest less than $2,000, the amounts put aside can be ``small enough that you don't even miss them,'' says Peter Langer, vice-president of Capital Research & Management Company in Los Angeles.

For young investors who still have money to invest after putting $2,000 into a retirement fund, financial advisers encourage investing in an aggressive growth mutual fund that suits one's individual objectives. The amount of control over the money - liquidity - is important, Berg says, because of a young investor's uncertain and changing needs.

``Find a good mutual fund, put a little in every month, and then you won't have to worry about market timing,'' Mr. Langer advises.

For those who have a little more money, and are willing to go out on a limb, credit can be a good wealth-builder, Berg says. By buying property or stocks on margin - that is, borrowing part of the purchase price from the broker - you can make sizable amounts on appreciation without having to use all your cash - assuming the stock goes up in price.

A lot of people can't afford more than one or two stocks when they first start out, so leveraging can help build a balanced portfolio of five to 10 stocks, to ride out the various slumps caused by business conditions and changes in the economy. Some 2 million investors buy stocks on margin.

While buying on margin can be profitable, however, it is considered dangerous for inexperienced investors, or those who recently paid off - or are still paying off - high-interest education loans.

``It's particularly bad for a young person to borrow to invest. What happens if the markets go down?'' asks Marshall Loeb, managing editor of Fortune magazine and author of ``Marshall Loeb's 1987 Money Guide'' (Little, Brown & Co., Boston, $24.95).

If the market is rising and you've put up only 50 percent of the cost of your stocks and 25 percent of your bonds, your money will work twice as hard. But if stock prices fall, you can lose your investment. Even at a young age, says Kidder Peabody's Mr. White, ``I can't justify taking that risk.''

The low interest rates on margin loans - between 9 percent and 11 percent, compared with personal bank loans, which can go as high as 18 percent - attract many investors.

Still, most financial advisers warn against buying on margin. ``A young person can take more risk ... but that does not mean they should take undue risk,'' Mr. Loeb says.

Instead, he and others recommend that anyone with less than $10,000 stick with growth mutual funds, where you get the benefit of knowledgeable portfolio managers, with less risk.

If a young person is tired of pouring money into an apartment, another way to build assets is to buy a house or condominium, White suggests.

A less expensive way to get involved in this business is through a real estate investment trust, or REIT. This is a pool of mortgages that have been packaged and sold to a big institutional buyer, often a mutual fund.

With low minimum investment requirements (generally $1,000 to $5,000), high (taxable) income, and the liquidity of being listed on major stock exchanges, REITs are good for those who can afford to take more risk, want to invest in real estate, but don't have enough to make a sizable down payment.

Although real estate is risky, a recent boost in the market has made it more attractive. Still, ``it's more risky than the blue-chip companies,'' White says.