Rule #1 - an emergency fund of 6-12 months living expenses, in checking or money market. (Putting more than this in cash is a bad idea, because the interest yo

Rule #1 - an emergency fund of 6-12 months living expenses, in checking or money market. (Putting more than this in cash is a bad idea, because the interest you earn doesn't keep pace with inflation.) Long-term savings should be in stocks (or gold or silver). Lazy allocation #1: 100% in S&P 500 index fund. Lazy allocation #2: 50% in S&P 500 index fund, 50% in gold/silver ETFs (like GLD, SLV, PHYS, PSLV). Advanced #1: Pick individual stocks in addition to index funds. Advanced #2: In addition to gold and silver ETFs, also take physical delivery. (a hedge against the possibility the the PM ETFs will default, see MF Global) Note: The stock market is a risk, but over a 5+ year time period it should do better than 0% in a checking account.