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If you’ll need your money during the next five years, don’t put it into stocks. That’s the long-standing rule of thumb, since stocks are risky in the short term.

For short-term needs, investors have generally favored very conservative bonds and bond funds, or old-fashioned bank savings. But in today’s market, emphasizing safety means earning practically nothing. The average five-year certificate of deposit yields just a tad more than 2%, according to the survey.

Isn’t there any way to do better? Well, there are ways to try. They generally involve more risk than bank savings, but that may be OK if the savings goal is a bit flexible. If you were saving for a down payment on a home and fell a little short of your goal, for example, you could buy a cheaper house or wait a little longer.

One option is “conservative allocation” mutual funds, which invest the bulk of their assets in bonds but try to boost results with some stocks. Vanguard Group’s LifeStrategy Income Fund (Stock Quote: VASIX), for example, has about 22% of its assets in stocks, 58% in bonds and the rest in short-term reserves that equate to cash. Annual returns have averaged 3.6% over the past five years, 4.7% over the past 10.

Use the Morningstar (Stock Quote: MORN) screener to find other funds in the conservative allocation category. Be sure to study fees, as many of these funds own other funds, producing two layers of expenses.

Keep in mind that the asset mix in a conservative allocation fund can fluctuate over time but generally keeps within an established range. That means there were will be some allocation to stocks even as your withdrawal date approaches, posing a risk that the fund could be down just as you need your money.

Another alternative is a target-date fund. While these are generally thought of as investments for retirement, they can be used for other goals as well, like building a down payment fund, or even buying a car.

Target-date funds typically start out with a large allocation to stocks but gradually shift to a more conservative mix of stocks and bonds over the years, ending with most the assets in bonds and cash when the target date arrives. The mix can vary considerably among funds with the same target date. Some, for example, keep a large stock holding on the assumption that growth will still be important after the target date because assets will be drawn down slowly over a 20- or 30-year retirement.

If your goal is to withdraw the entire sum on your target date, it may be better to use a fund that will reduce stocks to a minimum by that point. Fidelity Freedom 2015 Fund (Stock Quote: FFVFX), for instance, currently has a little more than 50% of its assets in stocks but will reduce that to 20% by 2015.

People investing for college should use tax-free target-date funds from 529 plans offered by states. Like other target funds, these shift from stocks to bonds as the target date approaches. But they are more conservative on the target date than the retirement-oriented funds, because they assume all the assets will be withdrawn in the four years after college starts.

Track these funds down at Funds in 529 plans cannot be used for non-college purposes without incurring tax and 10% penalty.

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