BEFORE spending your Hannukah, Christmas and bonus money on toasters, toys and Toyotas, invest some in stocks.
You think the market is too high now? Maybe, but stocks never lost money in any of the 56 15-year holding periods since 1926.
And stocks outpaced inflation in all but four of those periods.
I suggest that you disregard market fluctuations and ponder these cheerful figures:
If you put $25 a week in stocks that gain 10 percent a year -- that's under stocks' 10.5 percent average annual return over 70 years -- you'll have $104,071 in 22 years.
If, from age 20 to 65, you save $50 a month and get an 8 percent return, at age 65 you can take out $628.76 every month until age 100.
Those examples do not take taxes into account.
But in a tax-deferred IRA, if you invest $2,000 a year from age 25 to 35 -- then stop -- at 12 percent your money grows to $1.26 million by age 65.
And if you deposit $2,000 in a typical mutual fund annually for eight years beginning at 25, then stop, you'll have more at 65 than if you wait till 35 and contribute every year until age 65.
What stocks should you buy? You might consider trying the "Dow 5" strategy.
Buy the five lowest-priced of the 10 highest-yielding Dow Jones industrial stocks. Hold them one year, then rearrange them according to what the strategy dictates a year later.
Continue that procedure each year.
Since those stocks are low priced and temporarily out of favor, they are unpopular with most investors. But they represent large, established blue-chip companies. It's the discipline that makes the strategy work.
At midweek the "Dow 5" were AT&T;, Chevron, General Motors, International Paper and Minnesota Mining. They yield 2.9 percent dividend income.
MORE IDEAS: Steve Hanke, applied economics professor at Johns Hopkins University, says, "Invest in Asia -- I'm bullish on Hong Kong, the Philippines, Korea and Taiwan -- but avoid Japanese stocks. Japan's banks are loaded with bad debt, kept afloat by accounting tricks."
Don't neglect industry leaders; $10,000 invested in these Dow ,, Jones companies on Jan. 1, 1985, would have been worth these amounts 10 years later: Coca-Cola, $128,426; Merck, $93,104; and Walt Disney, $130,199.
If you want to invest locally, BGE and Black & Decker are recommended in a recent S&P; Outlook, and Bethesda-based Lockheed-Martin is favored by Morgan Stanley's Byron Wien.
Legg Mason's December "Recommended Stock" list includes Owings Mills-based Integrated Health Services.
Pub Date: 12/06/96