The first step is to determine an initial goal for your portfolio, a target portfolio size. You must decide how much money you want to invest in your portfolio. An easy way of determining your target portfolio size is to divide the dollar amount of your emergency fund by the percentage of funds that you want to invest in cash and bonds. Cash and bonds are usually the assets included in your emergency fund. Let us assume that you make $60,000 per year, your goal for an emergency fund is four months of income ($60,000/12 * 4, or $20,000), and your target allocation for bonds and cash is 20 percent. With this information you can calculate your target portfolio size by dividing your dollar amount of your emergency fund ($20,000) by the percentage of funds in bonds and cash (20 percent) to give your initial target portfolio ($100,000). This goal is the first of many target portfolio goals that you will set.