Mix Up Your Money!

Mix Up Your Money!
More investing tips from experts

Studies show that it's not the specific stocks or funds that determine a portfolio's performance over time, but rather the combination of stocks, bonds and cash. Sound complicated? It doesn't have to be. As part of their 10 Finanical Resolutions, CNN Money experts advise people to mix it up when it comes to moolah. And the first thing they say is "Getting the right mix is not rocket science." Whew!

1. Begin by asking yourself the following questions:

How far away is the goal?
In the long run, stocks will most likely make you the most money, but they're a riskier choice. Do research to find out the specifics, but keep in mind when you begin that the sooner you'll need the money you've put in, the less you should hold in stocks.

How much risk can I handle?
Assess what you're comfortable with in terms of risk. Afterall, some investments fluctuate and a lot depends on when you decide to cash in on them. Know what you're getting into and how much up and down you can expect. For instance, fixedincome investments will smooth out short-term highs and lows, but give you lower returns over time.

What else do I own?
One of the most important things to consider when deciding how or where to invest is the total mix of investments you already hold. For instance (but not solely) your 401(k).

2. Use these rules of thumb:

Armed with a complete picture of your goals and expectations, determine what percentage of your portfolio should be in stocks.

If you want to be safe/conservative with your investments: Subtract your age from 100.

If you want to invest with moderate returns (a little riskier than the conservative option, but not terribly aggressive):Subtract your age from 110.

If you want to invest aggressively (bigger fluctuation, potential for biggest return): Subtract your age from 120.

Once you've done that, adjust your mix for when you plan to retire. The longer you can wait to tap your savings, the more aggressive you can be. So, CNN Money experts suggest increasing your stock allocation by one percentage point for every year you expect to work after the age of 65.

For the specifics of how to invest consult your finanical advisor.