Matching investments to your situation
When should you consider having a larger portion of your portfolio in stocks, bonds or cash?
Consider stocks when:
- You have a relatively long investment time frame — 5 to 10 years or longer.
- You want the potential to make substantial returns on your investments to reach your goals.
- You have the risk tolerance to handle major ups and downs in the market.
Consider bonds when:
- Your goal is to preserve your assets.
- You have a mid- to long-term investment timeframe.
- You can withstand some fluctuation in asset values on the way to achieving your goals.
- You need an income stream from your investments.
Consider cash when:
- You don’t mind a minimal return on your money.
- You may need to access a significant portion of your money in the near term.
Note: A savings account or a certificate of deposit (CD), may be better suited to meet a short-term goal (buying a car), while stocks, bonds, and mutual funds are best for long-term planning and saving (retirement).
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