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Personally, I take the most risky of all positions by remaining 100% invested in common equities; but for incidental cash positions; backed up by the ability to borrow up to 5 years of typical living needs.


I fall somewhere in between. While I agree that the 100% safe position is as stated by Pixy and intercst, I hate to see so much money tied up in cash or short term CDs, notes, or bonds. I find that 2 years of living expenses in a safe harbor is sufficient, with the ability to draw on a line of credit if the need arises. I often have wondered whether it would be better to go the route mentioned by TheBadger, which strikes me as being reasonably safe under most circumstances. Being a bit of a chicken, I have opted for something a little more conservative, but I would be interested in knowing whether anyone has run the calculations on risk/return for having to draw off a line of credit for 2 or 3 three years in order to avoid selling into a down market.

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