In two years, my allocation of $39,000 should look like this:

25% cash
0% bonds
28% real estate (since my mortgage is young, I’m not really building equity yet)
46% stocks

DINKs making decent $$$
Sally is a lawyer and makes $80,000. Some of her highflying has been curtailed by law school debt, but she knows her way around a ski slope. Boyfriend David is a chef, makes $50,000. They’re in their mid-30s and plan to get married. They have:

$35,000 cash (Sally) plus $5,000 cash (David)
$10,000 worth of bonds from David’s grandparents
$10,000 worth of stocks from Sally’s grandparents
and a Cuisinart

Their asset allocation:

67% cash
17% bonds
17% stocks

They’re not very comfortable with financial risk. In two years, they would like to have a house, a child, retirement plans and more Cuisinarts.

DINKs making decent $$$
Suggestions: The first thing this couple needs is to get some 401(k) retirement plan action. Since 401(k)s are tax deferred, they’re automatically a slightly better investment than anything you pay taxes on immediately. Sally and David should save at least 10% of their earnings that way.

Second: It’s important for them to move more of their money into stocks, as, over the long haul, they go up more quickly. In the long term, they should invest as much of their cash in stocks as they can stand, especially with their jobs acting as a cushion.

One way to make them more at ease with the risk is to direct investments into a mix of 80% stocks and 20% bonds — almost as rewarding as 100% stocks, and a little safer. In addition, $10,000 of their cash could go into a mutual fund with the same mix. (More would make them uncomfortable.)

In two years:

35% cash
20% bonds
45% stocks

This should be attainable if both work; if one of the two decides to stay home with a baby, they’ll have to cut back their lifestyle.

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