Q: You suggested to a couple that they should take $400,000 and put it in a low-cost index fund such as Vanguard Balanced Index shares. I have no idea what that means, but I hope you might be able to give me some advice as well. I have no 401(k), no retirement pension and no clue. I am 42. I have worked as a bartender and waitress since I was in my 20s. I make $2.13 an hour and always have (our minimum wage has been the same for more than 20 years). Over this time I have managed to save $17,000, which I put into a CD. Recently I transferred the CD to my checking account because CDs are paying only 0.25 percent. Now, a month later, I really want to invest the small amount I have saved into something that would earn more money. Should I put the money back into an 18-month CD at 0.25 percent, or in a savings account at 0.65 percent?

A: Itís difficult to save money when your income varies significantly from week to week and your employer doesnít offer any kind of plan. Basically, the whole burden of creating your future is in your lap, as it is with millions of other people who are employees in small businesses. Worse, no one is going to get very far by preparing for retirement at current interest rates on certificates of deposit. So let me make a series of suggestions:

First, start a checking account at a discount broker, such as Charles Schwab. Visit an office and ask someone to help you. (You can close your existing checking account, too.) While you are at it, open a brokerage account and an IRA account. Make sure you get online access.

Deposit two or three months of your expenses into the checking account. Put most of the remainder of your $17,000 in the brokerage account, but reserve about $1,000 to start the IRA account.

Put half of your brokerage account money in the Schwab U.S. Dividend Equity exchange-traded fund, often called an ETF (ticker: SCHD). Put the other half in the Schwab U.S. Aggregate Bond ETF (ticker: SCHZ).

In the IRA, start by investing in the Schwab U.S. REIT ETF (ticker: SCHH).

All of this can be done with no commission cost, and the highest annual expense ratio for any of the ETFs is 0.07 percent a year. This means you will get 99.93 percent of the return on your money, an amount as pure as Ivory Snow. Your brokerage account will be invested in a very similar way to what I call my original Couch Potato portfolio, except that it will lean a bit more toward yield. The current yield on the Dividend Equity fund is 2.95 percent and the current yield on the Aggregate Bond fund is 1.37 percent. The current yield on the REIT ETF for your IRA is 3.21 percent.

Put your paychecks and tips in your checking account and make a regular monthly transfer to your IRA.

These investments are not risk-free. Sometime over the next 25 years you are likely to suffer a significant loss. So let me tell you one of the advantages you have as a bartender/waitress. Unless you accumulate a very large amount of money over the next 25 years, the odds are that the majority of your retirement income will come from Social Security. Since such a small portion of your future depends on investing, you can afford to take more risk than people who make substantially more, such as doctors and lawyers.

The most unusual thing suggested here is to start your IRA investing with a commitment to a real estate investment trust (REIT) index ETF. This suggestion is based on the assumption that you rent, so you donít have anything invested in real estate. Homeowners, as a group, should only commit to real estate investments after they have committed to other asset classes because most Americans have most of their net worth in their home equity. You donít.

Once youíve taken these steps, you donít have to do anything until the value of the REIT investment equals the value of the other two investments. Then youíll need to start investing in the Schwab International Equity ETF (ticker: SCHF). Thatís about all youíll need to do for about two years. During that time, you can learn about Couch Potato investing in this column and on my website, www.assetbuilder.com.

Questions about personal finance and investments may be sent by email to scott@scottburns.com.