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While reading on the Retirement Investing Board, I came accross an approach which says essentially

1) put 1 year's income (say 6 or 7%) in a money market
2) put 3 years income in a bond fund (short to intermediate)
3) keep the rest in stocks (index or growth or what ever)

The idea is if stock take a serious dive, you can leave your money there and don't have to take losses. If stocks go up, then you just keep the system full.

Also I found an excel spread sheet which gave a suggested distribution between bonds and stock based on your expected life expenctancy. This is a very good board.
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