Cash or Bonds (UK)
The 'appropriate' amount of cash/bonds to hold will be largely a matter of opinion, but here are the general reasons why having at least some is a good idea: Cash is very liquid, and bonds are often mostly liquid. This means you can access them very quickly, without taking on losses. To get the most liquidity out of your bonds, you can do what is called 'laddering'. This means that you take out different bond amounts with different maturity dates, and periodically renew them on a schedule, so that you always have some bonds maturing, which you can access without paying an interest penalty. You can look this term up online for more details. Cash and bonds are low risk. If you have absolutely no low-risk assets, then in the event of, say, a market crash, you may have no savings to fall back on. By owning some bonds, and some equities, you are able to earn a modest return, without being too risky. However, note that some bonds are just as risky as equities - any bond which pays an abnormally high interest rate does so because the entity backing the repayment (government, company, whomever) is thought to not be guaranteed to be able to do so. The 25% figure given by your author is his opinion on the appropriate mix of cash/bonds to equities, but there are many views on the matter. Consider that any 'rule of thumb' in personal finance should be for general consideration only.
As average house prices continue to rise, almost 40% of homes in the UK are purchased with cash. Stage 1 – Finding a property you can afford Stage 2 – Making an offer Stage 3 – Organise a solicitor and surveyor Stage 4 – Finalising the offer and mortgage (in your case, cash with proof of funds, balance due at closing) Stage 5 – Exchanging contracts Stage 6 – Completion and final steps You don't need to prove where the money came from but, as you have said that you are a cash buyer, you do need to be able to prove that you have the cash to buy the house. So, assuming you have the money in an account with a bank or building society, you should be able to satisfy your solicitors by showing them a recent bank statement or passbook which clearly shows that you have whatever amount it is in cash. This is a very common misconception. I've been studying equities and credits for a while now, and the simplest way to explain the difference is this:  - Credit is about stable cash flows. Your investment in a bond has almost (read: almost) nothing to do with growth rate. It has everything to do with how stable the cash flows are and interest coverage.  - Equity is about growth. No wonder companies with highly irregular cash flows (e.g., every single young tech company in the history of tech companies) can have the most in-demand equity while few bond investors would touch them with a ten foot pole. "TL;DR: If your currently held bond's bid yield is smaller than another bonds' ask yield. You can swap your bond for bigger returns. Let's imagine you buy a long bond for $12000 (face value of $10000) and it has 6% coupon. The cash flows will have an internal return rate of 4.37%, this is the published ""ask yield"" in 2014 of the bond. After six years, prices have fallen, inflation and yields went up. So you can sell it for only $10000. If you would do it, the IRR will be only 2.55%, so there will be less return, than if you keep it.  But if you would ""undo"" the transaction, then the future cash flows would yield 6.38%. This is the ""bid yield"" in 2020 of the bond. If you can find an offer that yields more than 6.38%, you have better returns if you sell your bond and invest that $10000 in the other bond.  But as other answers pointed it out, you rarely have this opportunity as the market is very effective. (Assuming everything else is equal.)" As others have pointed out your bond funds should have short durations, preferably not more than about 2 years. If you are in a bond fund for the long haul meaning you do not have to draw on your bond fund a short time after interest rates have gone up, it is not a big issue. The fund's holdings will eventually turn over into higher interest bearing paper. If bonds do go down, you might want to add more to the fund(s) (see my comment on age-specific asset allocation below). Keep in mind that some stocks are interest sensitive, for example utility stocks which are used as an income source and their dividends compete with rates on CDs which are much safer. Right now CD rates are very low. This could change. It's possible that we may be in an unusually sensitive interest rate period that might have large effects on the stock market, yet to be determined. The reason is that rates have been so low for such a long time that folks that normally would have obtained income streams from bonds have turned to dividend bearing stocks. Some believe that recent market rises are due to such people seeking dividends to enhance cash inflows. If, and emphasis on if, this is true, we could see a sharp drop in the market as sell offs occur as those who want cash streams move from stocks to ultra safe, government insured CDs. Only time will tell if this is going to play out. If retirement for you is 15+ years in the future and the market goes down (bonds or equities), good stuff - it's a buying opportunity in whatever category has dropped. Most important is to keep an eye on your asset allocation and make sure it is appropriate to your age. You did not state the percentages in each category, so further discussion is impossible on that topic. With more than 15 years to go, I personally would be heavily weighted on the equity side, mostly mid-cap and some small equity funds or ETFs in both domestic and international markets. As you age, shuffle some equities into fixed income (bonds, CDs and the like). Work up an asset allocation plan - start thinking about it now. Don't wait. "I'm in the US, so there may be idiosyncrasies with UK taxes that I'm not familiar with, but here's how I've always treated stock I get as compensation.   Suppose the vested shares are worth X.  If I had X in cash, would I buy my company's stock as an investment?  Usually the answer is no, not because I think the stock will tank, but because there's better things I can do with that cash (pay off debt, unfortunately).  Therefore I sell the shares and use the cash for something else. You have stock options. So suppose the stock value is X but you can buy it for Y.  You can either: Therefore, the math is the same. If you had X in cash, would you buy your company's stock as an investment?  If so, then option 2 is best, because you can get X in stock for a lower cost. (Option 3 might be better if the gain on the stock will be taxed higher, but they're pretty much equivalent if there's no chance that the stock will drop below Y) If not, then option 4 is best since you will likely get more than X-Y from selling the options that by exercising them and selling the stock (since options have time value). If option 4 is not a possibility, then option 1 is best - you pocket X-Y as ""income"" and invest it however you see fit." The correct p/e for bp.l is 5.80. Bp.l is on the London stock exchange and prices are in local currency. The share price of 493 is reported in pence (not dollars). The EPS is reported in pounds. Using .85 pounds = 85 pence, you calculate the EPS as follows: 493.40/85 = 5.80 PE Yahoo totally screwed up. They converted the .85 pounds into US dollars ($1.34) but didn't convert the 493 pence. By using the 493 as dollars, they got 493.9/1.34 = 368 pe! Notice that Yahoo reports the American Depository Shares (symbol 'BP') with an EPS of $8.06. That correctly reflects that there are 6 shares of BP.l per ADS (1.34 * 6 = 8.04). But why is the share price listed at $46.69? Well...  493 GBp (pence) = 4.93 pounds 4.93 pounds  = 7.73 USD 7.73 USD * 6 shares per ADS = 46.38 USD One way of looking at this (just expanding on my comment on Dheer's answer): If the funds were in EUR in Germany already and not in the UK, would you be choosing to move them to the UK (or a GBP denominated bank account) and engage in currency speculation, betting that the pound will improve?   If you would... great, that's effectively exactly what you're doing: leave the money in GBP and hope the gamble pays off.   But if you wouldn't do that, well you probably shouldn't be leaving the funds in GBP just because they originated there; bring them back to Germany and do whatever you'd do with them there. I am assuming that you are talking about US Savings Bonds: Here is a page that talks about maturity dates of US Savings bonds. If They aren'tSavings bonds but are another type ofUS Government Bond Assuming they are Savings bonds, here is information regarding redeeming of bonds. How do I redeem my EE/E Bonds?  Electronic bonds:     Log in to Treasury Direct and follow the directions there. The cash amount can be credited to your checking or savings account within one business day of the redemption date.  Paper bonds    You can cash paper EE/E Bonds at many local financial institutions. We don't keep a list of banks that redeem bonds, so check with banks in your area. What will I need to redeem a paper bond? Before taking in the bonds to redeem them, it's usually a good idea to check with the financial institution to find out what identification and other documents you'll need.   When you present your paper bonds, you'll be asked to show your identity. You can do this by being a customer with an active account open for at least 6 months at the financial institution that will be paying the bonds, or presenting acceptable identification such as a valid driver's license if the >redemption value of the bonds is less than $1,000. If you are not listed as the owner or co-owner on the bond, you'll have to show that you >are entitled to cash in the bond.  The treasury direct website also discusses converting bonds, rules regarding using them for education, how often they are credited with interest