[jackowayed]

But it also makes sense to hedge against the market to some extent, right? Have some amount in safer things (bonds, even money market and/or some t-bill equivalent), things that sometimes go in different directions than the market (eg. commodities). What's a good way to find a balance for that?

[stygiansonic]

Finding the right portfolio for yourself is actually a pretty involved question. It depends on your personal situation: Things like whether you have kids, whether you own a house or are planning on buying, what your retirement goals are, etc.

A straightforward bond/stock split has been recommended, and it's probably the simplest but even then there are questions of which bond fund/ETF and which index/equity fund/ETF to choose.

Creating a plan requires understanding what your tolerance for risk is. It doesn't have to take a lot of time [1] and some basic reading and math will enable you to pick what's right for you. Basically, are you willing to tolerate more volatility (i.e. variability in year-to-year returns) in exchange for higher returns in the long-term?

1. http://www.finiki.org/wiki/Portfolio_design_and_construction

[saryant]

Of course, that fund was just an example.

John Bogle, founder of Vanguard, recommends "your age in bonds". So if you're 20, make bonds 20% of your portfolio. Some adjust this up or down depending on their appetite for risk (I think age minus 10 is the common advice from Vanguard now).

[dredmorbius]

If you're hedging against a total market collapse, I'd suggest productive farmland and strong community ties.