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18. Trim back on treasuries
Nervous investors have piled into government bonds, the traditional safe haven in scary times. (Unlike mortgage holders, Uncle Sam always makes his payments.) But steep demand has pushed down Treasury yields, so it's time to diversify some of that money.

Investment-grade corporate bonds, for example, were paying investors around 21/2 percentage points more than Treasuries in early August. The best way to get into corporates is through a diversified intermediate-term core bond fund, says Morningstar's Lawrence Jones. Harbor Bond, a Money 70 fund led by Pimco's Bill Gross, has a competitive expense ratio of 0.56% vs. 0.97% for the category.

Municipal bonds look like a deal too. Their yields are usually four-fifths those of a similar Treasury bond because the income they throw off is free of federal (and maybe state) income taxes; today munis and Treasuries pay almost the same. Vanguard Intermediate-Term Tax- Exempt fund is the best pick here.

NEXT: Hang up on the sales pitches

Last updated August 16 2008: 4:37 PM ET
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