Should I move my IRA funds to cash?

We've been seeing a lot of questions from people about whether they should take their money out of stock investments and put it into cash. If you haven't done so already, it's really too late. The time to move money into cash to protect your principal was last year when the DOW was in the range of 13,900 and the S&P was 1,500. Some people who try to time the market did call that right. But the reality is that few people can accurately time the market.

The big mistake you will make if you sell your stock portfolio now and convert it to cash is the classic mistake of many investors -- you will have bought high and sold low. Unless you do need the cash now (and you shouldn't have been in the stock market if you do), then you'll have to bite this bullet and sell. But, if you are someone who doesn't need the cash now ride this market out.

Generally I recommend to people that they balance their portfolio with these four principles in mind:

1. Any funds that you will need in the next two years should be held in cash or cash equivalents (such as money market funds, CDs)