You just said you would recommend 60% stocks and 40% bonds – do you recommend three months of cash in the bank?
Every investor’s situation is unique, so CTA does not recommend a one-mix-fits-all allocation for stocks and bonds. This mix of investments and percentages was provided for example only – the asset allocation chosen by a participant should depend on his or her goals, timeline and risk tolerance. There is a wealth of investing information and resources available to you at ctainvest.org to guide your personal decision. If you are still uncertain about an investment allocation that is appropriate for your situation, it may be beneficial for you to meet with a financial advisor. The downloadable booklet Selecting a 403(b)/457 Advisor and Understanding Plan Fees provides tips for selecting an advisor who is compatible with your investing outlook.
As for cash in the bank, three months’ worth of living expenses is a great goal. In fact, many financial experts recommend having three to six months’ worth of living expenses in a liquid account as an emergency fund. Of course, this goal can take a lot of time and discipline to achieve, but it’s one that can provide peace of mind once you get there. It’s OK to start small! These savings tips, which include joining a credit union and using direct deposit, can help you work toward your savings goal.
Important Note: CTA does not give tax, legal or investment advice. You should meet with your tax, legal, and/or investment advisor to determine the best fit for your situation.