NEW YORK — Next to deciding how much money to save for retirement, the most important decision a worker can make is how to allocate assets among stocks, bonds and money-market mutual funds.

But the words "asset allocation" apparently are a big turnoff to most people who have 401(k) and other company-sponsored retirement savings accounts.

A recent study by the Wharton School at the University of Pennsylvania of accounts managed by the Vanguard Group found that 80 percent of savers made no trades at all in 2003 and 2004, and 10 percent made just one trade.

"When it comes to managing their portfolio on an ongoing basis, participants were otherwise occupied," concluded Olivia S. Mitchell, a professor of insurance and executive director of Wharton's Pension Research Council.

How savers should determine their asset allocations depends on two things, time horizon and risk tolerance, said Catherine Gordon, a principal with Vanguard.

"The first question is, 'How much time do you have from today to when you need to start using the money?' " she said. The second is whether you can sleep at night knowing your portfolio could go up — or down — 20 percent in the course of the year."

Stocks historically have yielded more than bonds, but stocks also can suffer greater swings in value than bonds, making them riskier.

Bonds, too, can be volatile, while money-market mutual funds are the most stable, but have the lowest yield.

So younger savers, who have many years to invest before they retire, can put a larger amount of their savings into stock mutual funds than older savers, who likely will rest easier with more bond funds in their accounts.

But how should any individual saver actually allocate assets?

The easiest way is to use the asset allocation calculators on the Web sites of the major fund companies, Gordon said. Vanguard has an investor questionnaire at www.vanguard.com that can produce suggested asset allocations based on an investor's age and risk tolerance. Fidelity Investments at www.fidelity .com has model portfolios in its Retirement Resource Center.

Ronald Roge, chairman and chief executive of the R.W. Roge & Co. wealth-management firm in Bohemia, N.Y., said good asset allocation helps savers reduce the risk in their portfolios.

"In the investment world, you try to spread your money over various asset classes — the basic ones are stocks, bonds and cash," he said. "Your decision there controls a large amount of the risk your portfolio is taking."

In today's market, Roge would recommend a portfolio with 63 percent in equities, 32 percent in fixed-income and 5 percent in cash for an investor willing to accept moderate risk.

The equities portion should include some international stocks or international stock mutual funds, while the fixed-income portion might include some traditional bond funds as well as inflation-indexed bond funds, he said. The cash portion could be in money-market mutual funds.

Once savers have selected their asset allocations, they need to check on them periodically to make sure they don't get out of alignment. A good year in the stock market, for example, could raise the value of an investor's stock holdings so they would represent a larger share of the portfolio at year's end than they did at the start of the year.

"Generally, rebalancing doesn't have to happen more than once a year," Roge said. "Unless a category is more than 5 percent out of whack, I'd just keep an eye on it."

Greg McBride, senior financial analyst at Bankrate.com in North Palm Beach, Fla., said he worries that some investors take too much risk with their savings while others don't take enough.

"The greatest risk short term is investing too aggressively," he said. "If you're 61, just four years from retirement, and all your money is tied up in stocks or in your own company's stock, it's very risky."

On the other hand, he added: "The greatest risk long term is investing too conservatively. If you're 25, you need to have 80 to 90 percent of your money in stocks to outpace the effects of inflation."