But you may already have a significant amount of money not in the markets. That's not necessarily a bad thing, as long as you handle it wisely.
High-net-worth households keep 27.3 percent of their portfolios in cash or cash equivalents, according to the Capgemini World Wealth Report published last year. That is sandwiched between 31.1 percent held in equities and 18 percent in fixed income, according to the report.
Research shows that having stores of cash can increase happiness. A study published last year found that individuals with more liquid wealth reported that they have more life satisfaction.
"If that makes the client feel confident that when the market goes down, 'I still have this amount that's just liquidity,' there's actually a tremendous value," said Michael Halloran, head of business development and partnerships at MaxMyInterest, an online platform that aims to help investors get higher yields on their cash.
"If they're happy that they're not feeling anxious, then they can tolerate greater fluctuations in the portfolio," Halloran said.
Millennials, who entered the market around the time of the financial crisis, typically hold a lot of cash, Halloran said. Baby boomers, who still suffer from jitters from that downturn, also like to keep liquid funds close by, according to financial advisors.
Experts typically recommend that individuals keep three to six months' expenses in an emergency fund. If you're particularly risk averse, or it would take more time to replace your income, you may want to put away even more.