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Investor Psychology

How Much Stock to Buy or Sell?

To know how much money to keep in stocks, you need to identify an appropriate level of risk in your investment strategy. Are you investing for growth, aggressive growth or maintenance?

Typically, your age guides these investment decisions. Use this one simple rule of thumb to identify a safe investment strategy, which determines how much of your retirement fund to hold in stocks:

1.Subtract your age from 110 and multiply by 1.25. (Investors under 30 should put all their long-term investments in stocks.)

2. At least once a year, run down your full menu of investments -- brokerage accounts, employer-sponsored retirement plans, IRAs -- and see if they square with the amounts you want to devote to stocks and bonds (use the free Instant X-Ray tool at Morningstar.com).

Among stocks, examine your mix of large and small companies, and foreign and domestic firms to diversify your risk.

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