Generally speaking, the types of investments you make should be based on your tolerance for risk. In other words, how much money can you stand to lose? The stock market is the best way to earn the most money over time, but it's also the riskiest. You could also lose the most there. We recommend that you don't buy stocks with money you're going to need in the next five years. Bonds are less risky than stocks, but the flip side is that they will earn you less money. They might not earn enough so you can afford your retirement. We urge you to consider what we call an investment "sleeping scale, " which helps measure the safety of your investments by how much sleep you might lose worrying about them. We find most people sleep comfortably with a balance of stocks, bonds, cash, and other investments, such as real estate. This balance changes as you get older, becoming more conservative over time. Here, let me show you a few examples of some typical investment pie charts.
