NEW YORK (CNN/Money) - I have continually invested in my 401(k) plan, but my balance has been stagnant. Should I just switch to a simple interest-paying account so I'm assured at least some growth?

-- Dale Mokaren, Cleveland, Ohio

This is one of those situations that calls for the investing equivalent of "tough love."

So here goes: I know you're feeling hurt and troubled by the lousy performance of your 401(k). I feel your pain.

But I want you to focus and listen: Do not, repeat not, stop contributing to your 401(k). And do not continue investing in your 401(k) but direct your contributions to your plan's money fund or stable-value account.

Such a strategy may have a short-term benefit in the sense that it can assuage your feelings of anxiety at not making progress with your savings. But over the long term this strategy is more likely to hurt than help you because it will reduce the chances of your retirement nest egg growing large enough to provide sufficient support in retirement.

Now, relax and take a few deep breaths as I explain why you've got to fight the impulse to crawl into a CD or money-market fund and lick your wounds.

As I explain in my new book, "We're Not In Kansas Anymore: Strategies For Retiring Rich In A Totally Changed World", a smart investing strategy for retirement involves taking some risk. Not "throw it all in tech stock" risk. Prudent risk. Which means creating a well-rounded portfolio that includes a good solid growth component.

By that I mean stocks or stock funds. These investments can deliver a long-term return that's high enough to keep the purchasing power of your savings growing faster than inflation.

Notice I said "long-term." Fact is, there are going to be times when this component of your portfolio will languish or even backslide. We all found out just how unsettling that could be when stocks collapsed between early 2000 and the fall of 2002.

But over long stretches, stocks have a good track record of delivering lofty returns. In the past, those returns have averaged about 10 percent per year. Many experts believe we may be in for a period of somewhat lower returns over the next 10 years or so. Maybe more like 8 percent.

But whatever return stocks average, it's likely to be higher than that for less volatile investments, so you want to have them in your retirement portfolio.

You also want a component of your portfolio invested in less volatile investments, however, such as bonds and even cash equivalents, such as money-market funds or stable-value accounts.

One reason you want to do this is because as good as stocks' past track record is, there's no guarantee they'll outperform in the future. So you want to hedge your bets a bit.

What's more, most investors don't like the idea of their entire retirement account bouncing up and down like a yo-yo. It's unnerving. So by putting a portion of your money into bonds (or, more likely bond funds) and some into cash equivalents, you can dampen the volatility and reduce the size of the occasional setbacks your portfolio will suffer.

So if you keep these three components in your portfolio (actually, if you're young, you can probably do without the cash part), you'll have that nice well-rounded mix I mentioned earlier -- and you'll have a good shot at solid returns that will keep your savings growing faster than inflation.

That's important because you want the money you put away to be able to buy more in goods and services during retirement than it would buy today. Otherwise, there's no gain to saving.

There's no single mix of stocks, bonds and cash that's right for everyone. But you can get an idea of how to divvy up your money by going to our Asset Allocation tool.

I also go into quite a bit of detail about this subject in my book. As you get closer to retirement, you'll likely want to make your mix a bit more conservative by increasing your exposure to bonds and cash, although you still want to keep a portion of your holdings in stocks.

I think setting and maintaining a mix of assets is a task that's well within the reach of most investors. But if you don't want to do this on your own, there is an alternative: invest in what are known as retirement target funds.

Basically, these funds hold both stocks and bonds and then gradually increase your exposure to bonds and cash as you get closer to retirement. You choose a fund with target date that roughly matches the year you plan to retire.

The farther you are from retirement, the larger the percentage of stocks the fund includes, but over the years the mix becomes more conservative. In short, the fund adjusts the mix for you.

These funds have become very popular lately, particularly in 401(k) plans. So there's a good chance you have this option in your account.

If you don't, you can always invest retirement savings you keep outside your 401(k) in such a fund. And you could even duplicate the target fund's strategy by using the funds within your 401(k) plan to mimic the target fund's mix.

For more on how these funds work, you can check out the target funds offered by Fidelity, Vanguard and T. Rowe Price.

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But however you create a well-rounded portfolio -- with a target fund or by setting and maintaining a mix yourself -- stick with your disciplined diversified approach.

Because if you revamp your portfolio every time you feel bad because you're falling behind (or, for that matter, because you're doing well and feel more confident about investing more aggressively), you're not following a strategy, you're investing on emotion and whim. And that's no way to build wealth for retirement.

Walter Updegrave is a senior editor at MONEY Magazine and is the author of "We're Not in Kansas Anymore: Strategies for Retiring Rich in a Totally Changed World."