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And that's what we're going to talk about in today's podcast. As usual, host Stacy Johnson is joined by financial journalist Miranda Marquit. Listening in and sometimes contributing is producer Aaron Freeman. This week's special guest is Brad Baldridge, one of the nation's leading college planning experts and the founder of the website Taming the High Cost of College.

Remember, even though we sometimes talk about money and specific investments on this show, don't take them as recommendations. Before investing in anything or making any money moves, do your own research and make your own decisions. All investments involve some degree of risk. If you intend to purchase securities - such as stocks, bonds, or mutual funds - it's important that you understand before you invest that you could lose some or all of your money.

You could lose your principal, which is the amount you've invested. The reward for taking on risk is the potential for a greater investment return. If you have a financial goal with a long time horizon, you are likely to make more money by carefully investing in asset categories with greater risk, like stocks or bonds, rather than restricting your investments to assets with less risk, like cash equivalents.

On the other hand, investing solely in cash investments may be appropriate for short-term financial goals. The principal concern for individuals investing in cash equivalents is inflation risk, which is the risk that inflation will outpace and erode returns over time. For bank accounts, go to www. Consider an appropriate mix of investments. By including asset categories with investment returns that move up and down under different market conditions within a portfolio, an investor can help protect against significant losses.

Historically, the returns of the three major asset categories — stocks, bonds, and cash — have not moved up and down at the same time. Market conditions that cause one asset category to do well often cause another asset category to have average or poor returns. By investing in more than one asset category, you'll reduce the risk that you'll lose money and your portfolio's overall investment returns will have a smoother ride. If one asset category's investment return falls, you'll be in a position to counteract your losses in that asset category with better investment returns in another asset category.

In addition, asset allocation is important because it has major impact on whether you will meet your financial goal. If you don't include enough risk in your portfolio, your investments may not earn a large enough return to meet your goal. For example, if you are saving for a long-term goal, such as retirement or college, most financial experts agree that you will likely need to include at least some stock or stock mutual funds in your portfolio.

Lifecycle Funds -- To accommodate investors who prefer to use one investment to save for a particular investment goal, such as retirement, some mutual fund companies have begun offering a product known as a "lifecycle fund. The managers of the fund then make all decisions about asset allocation, diversification, and rebalancing.

It's easy to identify a lifecycle fund because its name will likely refer to its target date. For example, you might see lifecycle funds with names like "Portfolio ," "Retirement Fund ," or "Target One of the most important ways to lessen the risks of investing is to diversify your investments. By picking the right group of investments within an asset category, you may be able to limit your losses and reduce the fluctuations of investment returns without sacrificing too much potential gain.

Create and maintain an emergency fund. Most smart investors put enough money in a savings product to cover an emergency, like sudden unemployment. Some make sure they have up to six months of their income in savings so that they know it will absolutely be there for them when they need it. Pay off high interest credit card debt. There is no investment strategy anywhere that pays off as well as, or with less risk than, merely paying off all high interest debt you may have.

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Those performances make assets with any gains look much more attractive. Money market mutual funds offer investors safety, making them a solid place to park cash. In addition, though market losses can be hard for investors to stomach, many stocks are now trading at a huge discount, which means it could be a good time to buy more risk assets.

When they make sense for investors Most financial advisors only recommend holding cash in money market mutual funds for certain kinds of retail investors — those with very low risk tolerances, or who need to keep money on hand for a short-term use. This can make sense for people on fixed incomes, such as retirees, he said.

Liquidity is a benefit of the funds as well. Having some money in a money market fund also makes sense if you're anticipating a large purchase, such as a house, car or paying for a child's college education in the near term. It's also a good place to store your emergency fund.

Financial advisors typically recommend having three to six months of expenses in cash on hand. He added that investors should also note that not all money market mutual funds are insured by the FDIC, unlike checking and savings accounts or money market deposit accounts. Consider fees Of course, though yields on money market mutual funds are on the upswing, they still aren't keeping pace with inflation, which is up 8. Still, Crane points out that inflation is eating into returns on all investments as it erodes purchasing power.

A more troubling hit to the higher returns seen on money market funds is fees, which are increasing as yields climb. And that doesn't include the cost of books, food, housing and other living expenses. So it could cost your kids tens of thousands to get their degree. It could also mean starting adult life with debilitating debt. Fortunately, there are workarounds to high costs and soul-sucking debt.

And that's what we're going to talk about in today's podcast. As usual, host Stacy Johnson is joined by financial journalist Miranda Marquit.