The U.S. inflation rate is at 1.5% the trend seems to signal low inflation and possibly deflation. Europe also seems to be in a deflationary state. The answer is simple when inflation is at 1.5% in the U.S. and 1.2% in the Euro Area, not much risk is needed to protect your money. An investor with $50,000 only needs $750 in profit to protect his money with our current inflation rate. Only take on more risk if you believe it is necessary and possible to make large profits this year in securities.
The U.S. stock market is telling us that people are willing to take on more risk and tired of measly returns. Investors are taking more risk simply because there aren't too many alternatives especially with interest rates at 0.25%. The 10-year Treasury yield is currently at 1.75% at some point the Fed will start increasing interest rates making bonds undesirable. As an investor you find yourself in a peculiar situation our inflation rates have remained pretty low possibly flirting with deflation if so cash is your best bet then comes gold. If inflation begins to rise be prepared to move into stocks or real estate. Home prices have started to improve and in some states are making new peaks. Low mortgage rates (30yr fixed at 3.48% and 15 yr fixed at 2.69%) make real estate as an investment or a hedge for inflation rather attractive. In our present economic environment it is preferable to have some stock investments and a good amount of assets in liquid form to be able to move it once we begin to see signs of deflation or increased inflation. It is best to have a manageable amount of debt you don't want to be stuck with massive debt during deflation.