Here is what I do - I keep 2 months' worth of income in a high-yield saving account (a la ING) This amounts to about 5 months of living expenses for me, so it is a good safety net. - I stash away a small majority (say, 60%) of my long-term savings into index funds and relatively safe, stable stocks - Since I am fairly young (27), I invest a sizeable chunk (but still a minority; say, 40%) of my savings into riskier stocks with a potential to be a home-run down the road. I only invest into companies and technologies that interest or excite me. This makes research a pleasure rather than a chore.

The ratios will tip towards the conservative side as I get older.