I'm keeping my Cash $ in ST bonds-VFSTX +14% YTD
They have done great this yr and expect them to continue into next.. and the way I figure it? Even if they do loose -5 % ave. in 2010, as in 08', they're already up 14% and others more.. and end up +8.3% for the 2 yrs ending 2010.. or 4.1% yr for the 2 yrs..
If Preservation of Principal is you 1st goal..and Interest comes 2nd?
Putting your Cash Money from CD's into a Bal Fund of 40% equities is not a Mentally wise move, your used to that $ being there at all times and it won't be 100% of the time in a Bal. Fund, unless you go with a 20/80 bal Port or a fund like a HSTRX and even then, there is no guarantees...
If your 0 Risk Tolerance , I'd either stick to your ST bond funds like VFSTX, VSGBX, VBISX or other's like them or Ladder your CD's again until Mid next yr at the earliest..
On the otherhand? The Fed just said they don't expect to have to start raising rates for the near future and beyond, impliyng not till probably 2011..
Add that to how long it took for the last Bear to start to recover ( 2nd qtr of 03' ) or over 3 yrs.. and it took another 2- 3 yrs after that for most Indexes to break even.. If it happens sooner this time? Great, but I'm not planning on it..
And FEAR is driving Bonds , Fundementals are not.. and when people get their meager Rtn. reports on their Savings , by early next yr, many are going to be forced to Invest into Equities..especially while watching Equites rtning 10-30%, the Bond Nav's will drop as the equities continue to climb..
History Does reppeat itself , over and over again..it's Human Nature.. It's the Fed that is goofing things up from allowing the markets correct itself ..