Many funds are down over 20% for the year, the market as a whole is down from its highs as much as 40%.

 If I told you 10 years ago that it almost didn't matter if you chose a stock fund, bond fund, or money market fund to grow your money, you would have thought I was crazy.  But some of the returns look like that TODAY. 

Which is very important.  Because unless you need to use your money TODAY you should not be panicking. 

Keeping in mind everyone's situation is different and that you should seek the counsel of a tax and financial professional before making any decisions regarding your portfolio, here are some good rules of thumb.

< 5

If you have a goal that requires you to touch your money in 5 years or less you should have very little invested in the stock market, that includes stock mutual funds and stock ETF's.

5à 10

If you have a goal that requires that you touch your money sometime in the next 5-10 years, then you should balance your portfolio between the amount of stocks and bonds that best fits your needs, experience, and risk tolerance.

10+
Over 10 years, and really over 15 years is where your can look to add even more stocks into your long term goal savings accounts (like your 401k).  This is not to say there is a guarantee you will make money, but your risk of losing money over time is reduced.

I need to use the money today!

Which leads us to our friends that need to use money now.  You should not be 100% in stocks, period.  This was true when the market was going up 20% a year, and it is true when it is down 20% this year.  You need an income strategy that balances your need for income along with the ability to grow money and hedge inflation.

There are many different types of income strategies to choose from, and you need to take into account many variables like; longevity in your family, how you feel about investing, your experience in the markets, your time horizon, your tolerance for risk, among other factors.

The problem many retirees, and those planning to retire, is that much of the advice you have been given has been programmed into computers that do not take into account human emotion and therefore can not predict the future (as much as they try to tell you they can).

The best software on the planet still resides on our shoulders.  We need to use the computer as a tool, and not rely on it for every answer.

Here is a free link to get you started using a tool that will lead you to THINK and make decisions with your head: http://www.myincomestrategy.com/strategy.cfm

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Finance expert Alan Klayman is the founder of the MyIncomeStrategy.com® program, which is designed to help people determine how to derive their retirement income from their assets without any investment bias! With over 25 years' experience, Klayman has helped over 10,000 individuals and advisors one on one, and many thousands more in hundreds of seminars, develop income strategies, as well as estate plans and other finance-related solutions. For questions, contact him at alk@myincomestrategy.com.