For what its worth, I'm something like 85/15 right now and have been since I figured out how all this stuff works. I have been FIREd for going on 3 years, and no plans to change it at all. I can weather a 50% drop without changing my lifestyle hardly at all, so I think I'm good. (not that I want to see my portfolio value drop that much, but I get what to do in that scenario and understand it will eventually come back up so no panic selling in the mix).
I am by no means an expert but here's my very uneducated take.
Your SIL sounds like she's harping on the
risk instead of understanding that most folks are scared of the actual
volatility of the market. So she is unable to separate the two even though they are NOT the same thing.
And she is also unable to figure out that some folks are okay with a bit of a roller coaster ride since those that ride it (have a higher stock percentage - in broad market index funds, mind you) know that in the end it is just a bit of a wild ride ending up in a decent place, as they understand the way the market works.
You said it yourself: she is coming from a place of fear and paranoia; that's where most folks reside when it comes to investing.
The short term drops are scary and investing in higher percentage of stocks seems fraught with risk only if:
• you are invested mostly in narrow/sector market stuff or trying to play the angles;
• don't get that the market will eventually go back up;
• don't understand that no one needs 100% of their portfolio right this minute so a crash of a year or two is NOT a time to sell it all;
• are unable to cut back even a dollar in the event that there was a several year crash/downturn
Honestly, I wouldn't bother talking to her at all about it any more. Anyone that gets smug and decides it is appropriate to talk down to someone about their position is pretty entrenched in the party-line, so any logical arguments are pointless. I think if she insists on bringing up the topic, I'd just tell her you're fine, thanks for asking and change the subject.
Or tell her it is so sad she says things like that, but since she's "invested" in making sure that she has job security and keeping the suckers on the line,
of course she has to say that/think that way (said in a very "oh you poor thing, let me educate you" tone). :D
Jim Collins' series has some great food for thought on this type of thing tho (much better than what I wrote):
http://jlcollinsnh.com/2012/04/19/stocks-part-ii-the-market-always-goes-up/http://jlcollinsnh.com/2012/05/09/stocks-part-v-keeping-it-simple-considerations-and-tools/