Question: After listening twice to your recent commentary about Wall Street and having recently read Robert Reich's blog titled 'The Continuing Disaster of Wall Street, One Year Later' I'm concerned about our stock investments and retirement timeline.

We're looking at retiring at the earliest in 2012. Our present investment portfolio is weighted to 'aggressive' mutual funds. Given our (hopefully) short retirement timeline another major downturn of the market would put us in a serious retirement hole to dig out of. It seems to me that we'd be better off shifting our stock to bond ratio to a safer mix. As always, we enjoy your advice and commentary. Joe, Hagerstown, MD

Answer: You're right to be concerned. We've had two recessions, two bear markets, and a credit crunch in 8 years. My basic assumption is that everyone needs to build a substantial financial buffer with their savings. Economic downturns are as much a part of a capitalist system as expansions and bull markets.

I like the approach of Jack Bogle, the founder of the Vanguard mutual fund behemoth and a regular guest on Marketplace Money. (By the way, any of Bogle's books on investing and money are worth reading.) His rule of thumb is that the fixed income portion of your portfolio should equal your age. So, if you are 30 years old, fixed income securities should be 30% of your portfolio; 55 years old, the fixed income portion is 55% of your portfolio. Bogle walks his investment talk, too. When I talked to him several months ago he was 80 years old and with that much of his portfolio in fixed income securities he didn't really even feel the sharp drop in stocks.

Of course, like all rules of thumb your age is just a starting point. You can decide to be more or less conservative, depending on your circumstances and household wealth. And with your fixed income investments I would stay conservative. For instance, Treasury Inflation Protected Securities, Treasury bills, Treasury notes are default free investments. So are I-bonds. Certificates of deposit and savings accounts that come under the FDIC insurance limits are good, too.

So, I'd play with the numbers and see if this approach works for you.

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