Many financial managers operate with a 60-40 or 50-50 recommendation for investing
versus savings, and adjust this recommendation based on an individual’s wealth and
the length of time until retirement. Your own risk tolerance and intermediate term
view of the valuation of the stock market should be important for you in determining
how much of your money should be in savings. Your asset allocation to savings will
be different from those of your neighbors and your relatives. You should never want
to be completely out of the stock market and you should never want to have less than a
year of living expenses in savings as an emergency fund.