Can you tell me how best to mix up my stock portfolio?

You are definitely on the right path. You don't want to have your future goals depend on one investment, no matter how secure that investment appears today. (Remember when the NASDAQ was trading above 5,000 ?) The more diversified your portfolio, the lower your risk.

You should start by having your money in three different asset classes—stocks, bonds and cash. There, you’ve already gained some diversification. Where do you go from here? Well, there is not much you can do with the cash component. Cash and cash equivalents, such as CDs, are all pretty much the same. While you could invest in bonds with different terms and interest rates, I think using short-term taxable or tax-exempt high-quality bonds is the way to go. This maximizes the diversification benefits of holding bonds in your portfolio while avoiding unnecessary risk.

So that leaves gaining further diversification by having multiple equity investments. And that is prudent. Not only do you want to have a mix of large cap and small cap funds, you want a percentage of your money in value as well as growth funds. Finally, and most important, you’ll want to have a significant portion of your money in international stocks. This can happen directly, by investing in international mutual funds, or indirectly, through the investment of large-cap stocks, which as a rule get a significant part of their earnings from overseas.

How do you divide up the money among the three asset classes? That’s up to you, and how comfortable you are with risk. Bonds are riskier than cash and stocks carry more risk than bonds. The general rule of thumb is to shift your portfolio to a more conservative mix of holdings as you age.

Although one size never fits all, someone who has just turned 55 might want to have about two-thirds of their holdings in stocks and the rest in bonds and cash. At 65, that mix might be 50-50.