Reply to How much in cash vs in the market

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[quote=Anonymous]Two years in an emergency fund is certainly not unreasonable, though I wouldn't recommend any more than that.  Make sure it's keeping up with inflation. You can do this with I Bonds, but with yearly limits it will take time to build up.

If you don't have a roth ira yet, realise that any money you put in can be withdrawn penalty free. It's only the earning that are locked up. Invested very conservatively Roths can be a good choice for emergency fund placement.

As far as your other investments go, the important thing is to pick an allocation that won't have you running back to cash as soon as the market has a bobble. Owning funds in a bear environment doesn't make you lose money- selling them does.

At your age anything from 80% to 66% stocks could be appropriate depending on your risk adversity. If you don't have much in the way of retirement savings, and with a hefty emergency fund, I'd personally go 80/20. I didn't blink an eye during 2008, though. If the thought of a crash like that breaks you out in a cold sweat go with 70/30. It's in a bit of a sweet spot, historically speaking: not much more risk than 60/40, not much less return than 80/20.

Again, the important thing is to make a plan and stick to it no matter what the market does. Changes should only be made when something changes in your life- the most common being adding bonds as you age.

Beyond your broad allocation, bogleheads.org is a good site for portfolio advice. They're friendly folk and you won't end up snookered by some anonymous broker making bank every time they churn your account.[/quote]

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