Like most important questions, this one doesn't have a simple answer that's appropriate for all women. So make sure that your doctor discusses with you both the pros and cons of taking estrogen. If so, nothing works as well or as quickly as short-term estrogen therapy. Taking it for up to 5 years will not increase your risk of breast cancer. Both of these can be debilitating and fatal.
Bone loss is greatest within the first few years after menopause.
If you're at risk for osteoporosis, you need to seriously consider some preventive therapy early on. And I can't emphasize enough the power of exercise and adequate calcium for protecting your bones. Evidence is continuing to evolve regarding ERT's effect on heart disease. But most of us still believe that estrogen significantly reduces the overall risk of heart attacks. The data is pretty consistent that women who take estrogen are less likely to get colon cancer.