I'm not a financial planner, so take any advice I give you with a huge grain of salt.
For short-term savings (vacations, a new car in a year or two, etc.), your best bet is almost always a high interest savings account (ING or whatever). Especially in the current economic conditions, I wouldn't put any money I wanted to use in the next 2-3 years into any kind of market fund.
For long-term (retirement) savings, the best practice is to go very high risk when you're young, switch to moderate risk when you're about 10-15 years away from retirement, then switch to low risk when you're 5-10 years from retirement.
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