I'm looking to rebalance my portfolio and move some of my stock investments into lower-risk investments, largely because I want to use some of it in the not-too-distant future (say 2-3 years). How should I allocate my finances between my Ally bank account, CDs, and the different types of bond fund (short, intermediate, long, and all-inclusive), and stocks?
I'm looking to maximize my return and am willing to take a small degree of risk, but I'm not sure where that is these days. Bonds and CDs are typically great for this, but I'm hesitant to put too much money into them with the likelihood of Fed tapering. Savings is great, but even with my account's relatively high interest rate, I'm concerned that I won't be getting the best return on my investment.
So what I'm thinking now is that the best strategy is diversification between these funds. What's the best way to allocate my short-term money?