Dear Readers: When the stock market plummeted in 2008, I got a lot of questions about the wisdom of investing in stocks. Now that the market has had a pretty good run, I’m getting questions from stock investors who are nervous about the future. Should they stay in or get out while they’re ahead? Though there’s no one answer that works for everyone, there is one key element that everyone needs to consider: time. That’s because whether the market is up or down, your own timeline should be your guiding force.

General Guidelines Everyone Should Follow — All the Time

First let’s talk about some general guidelines that apply to all investors, from the young investor just starting out to the seasoned saver living in retirement. Some of them you’ve probably heard before, but I think they’re worth reinforcing.

♦Honestly evaluate your feelings about risk. When times are good, it’s natural to want to jump right in with both feet. When times are bad, there’s a tendency to be more conservative. But no matter what the market is doing, you need to look inside first — at your own timeline and your personal feelings about risk. Don’t forget how you felt in 2008; your reaction then will most certainly be tested in the future.

♦Be thoughtful about your asset allocation. Building an investment portfolio is a bit like building a house; your blueprint is your asset allocation, or the way you divvy up your money among various asset classes, such as stocks, bonds, cash and other investments. This is your most powerful tool for controlling your level of risk, as well as your potential for gain.

♦Stay diversified. In plain English, this means not putting all of your eggs in one basket. In other words, spread your risk among many investments. If one ship sinks, you won’t lose the entire fleet.

♦Pay attention to your goals. As you determine and later review your asset allocation, keep your goals front and center. If stability is more important to you than growth or if you’re investing for short- to medium-term goals, it might be appropriate to gradually move out of the stock market. But your own circumstances — not market movements — should determine this.

♦Invest for the long term. A long-term perspective will help keep you on track, even during market downturns. Trying to time the market is never a good idea and can actually result in even greater losses. It’s equally important to have realistic expectations for long-term returns. We probably won’t see the double-digit returns of the recent past, but that doesn’t mean you should be jumping in and out of the market. On the other hand, a long-term approach doesn’t mean invest and forget. Checking your portfolio at least quarterly and rebalancing yearly will help you make considered, timely decisions.

♦Measure your portfolio against the right benchmarks. Tracking your portfolio against the right benchmarks will help you evaluate your performance in terms of the overall market. Take a look at benchmarks such as the Standard & Poor’s 500 index. How does your performance compare? Be sure to use appropriate benchmarks that reflect your own investments to get an accurate reading.

♦Get help when you need it. If you have a financial adviser, check in periodically. Many brokerage firms offer complimentary consultations so that you can discuss your asset allocation and get recommendations on possible changes. Even if you’re a do-it-yourselfer, a little professional help can go a long way in making you feel more confident.

Specific Scenarios — Depending on Your Time in Life

Now let’s get more personal. Your age and the time you have to keep your money in the market definitely are important factors in the way you invest. Here are just three scenarios that demonstrate how this may play out:

—Twenty-something —time is your greatest asset. As a young investor, your age is a huge advantage. Even though stocks can be volatile short term, long term they remain a key to portfolio growth. With a long timeline, you’re in a good position to ride out market highs and lows. And although you have to consider how much risk you’re personally willing to take, in general in your 20s, you could aim for as much as 80, 90 or even 100 percent in stocks.

—Mid-50s — there’s still time for growth. At this time in life, with retirement several years out, the potential for growth is still paramount. Someone who got out of the market in late 2008 would have lost a tremendous upside opportunity. So again, with your own risk tolerance in mind, you’d be well-positioned to consider having about 60 percent (or more) in stocks. Also, consider the alternatives. Bonds provide income, as well as stability, but they don’t offer the same growth potential. Cash may feel safe short term, but long term it’s far from it. Right now, returns on money market funds and Treasurys are negative after inflation. That said, you should always keep enough cash to cover at least three months’ worth of expenses in interest-bearing FDIC-insured accounts so you’re not forced to sell at the wrong time.

—Seventy and retired —be realistic about your time frame. This is the time to make protecting your savings a higher priority. Your first concern is having enough cash on hand to cover your expenses for at least a year, ideally three to five years. That doesn’t mean you should sell everything right away, but it does mean making a gradual shift to investments such as bonds and FDIC-insured certificates of deposit, still maintaining some equities (perhaps 20 to 40 percent or so) for growth.

Market risk goes hand in hand with investing; adhering to the time-tested principles of asset allocation and diversification is the key to mitigating that risk. So no matter where you are in life, make sure your portfolio is appropriately allocated and diversified to meet your circumstances and goals. And remember that your investing decisions should be based not on market timing but on the time you have to invest.

Carrie Schwab-Pomerantz, CERTIFIED FINANCIAL PLANNER ™ is president of the Charles Schwab Foundation and author of “It Pays to Talk.” You can e-mail Carrie at