You could just stick the low-risk part of your portfolio in the bank, but why not eke out some additional gains without much more risk? Take a look at Portfolio 208: How to Invest for Short-Term Goals for other short-term options.
Stocks are the way to go in the return-generating part of your portfolio. Most investors should opt for stock mutual funds rather than buying stocks directly. Mutual funds offer instant diversification, which is extra-important for intermediate-term investors. In-betweeners can't ride out volatility and take risk the same way that investors with longer time horizons can.
Specifically, large-cap blend funds make the most sense for intermediate-term investors. They invest in the core of the U.S. market and include value and growth stocks among their holdings, making them steadier than most stock funds are when the market hits a rough patch. Large-blend funds tend to be less risky than all other types of U.S. stock funds.
What About Balanced Funds? >>