Your retirement savings are sacred, so you don't want to take crazy risks. That doesn't mean you should rely solely on safe investments such as bank CDs and money market funds.
To build a nest egg large enough to see you through retirement, which may last 30 years or more, you'll need the growth that stocks provide.
Given stocks' superior long-term returns, some financial advisers recommend that investors whose retirement is still 20 years or more away put the lion's share of their portfolio in stocks and stock funds.
But if you don't have the stomach for steep downturns, a more prudent course is to throw some bonds into the mix. Putting 70% of your portfolio into stocks and 30% into bonds, for example, will let you capture most of the long-term growth of stocks while sheltering your investments somewhat during meltdowns.
As you approach retirement age, the idea is to shift more into bonds. But even in retirement, which can last a few decades, it pays to maintain a healthy dose of stocks (maybe upwards of 50% in your 70s, and up to 30% in your 80s).
Take care, however, to understand the kind of companies you're investing in. More volatile stocks may not be appropriate for you at this stage in your life.
For help on finding the right allocation for you, try CNNMoney's Asset Allocation Tool.
