Media personalities are often found giving advice about what asset class—stocks, bonds, or cash—you should own in your investment portfolio at the moment.
Naturally, people are interested in doing the right thing with their money, and they ask these kinds of questions: "How should I allocate my money?" and "Should I own stocks, bonds, or cash?"
My answer is… "Yes."
Most people, especially those in retirement or approaching retirement, should have a portfolio that has all three of these asset classes. The allocation should be determined based on your personal income needs.
In The Extreme Retirement Planning Workbook, there is a worksheet that is useful in determining how much of your money you need in the next year (your cash need), how much is needed in the years two through eight (bond holdings), and how much can be invested at least eight years for growth (stocks and growth-oriented holdings).
We call this the Three-Portfolio Approach. You can read about how this works in chapter eight of the workbook.