Figuring out your mix of stocks and bonds

First determine how much you like risk, meaning the ups and downs in the stock market. If you stare at the screen all day worried, chances are you don't like it. But if you're calm enough to handle the swings, then you may be more tolerant. I'm leaving a lot of things out like when you'll need the money, your investment objectives, etc. The following is what to do if a comfortable retirement is your goal.

So if you don’t think your blood pressure can hand market swings, then, conservatively, your bond position percentage should equal your age, with the balance in stocks. So if you’re 30 years old, you should have 30% in bonds and 70% in stocks. Or in other words…

Conservative percentage in stocks = (100 – your age).

If you can handle ride through the swings in the market, and can stand some of the stomach-wrenching ups and downs, then more aggressively

Aggressive percentage in stocks = (120 – your age).

So that adventuresome 30 year-old may have 10% bonds and 90% stocks.

Of course, do not invest money that you will need within the next 5 years. So if you’re planning on buying a house or car, it’s best to store that money in investments whose prices don’t fluctuate wildly, like CD’s or money markets.

So where do you go from here as you get older, well you have to rebalance periodically to keep your investments on track. I'll be posting more Forum topics on this soon..