NEW YORK (CNN/Money) - Wall Street has turned into a shark tank for short-term investors. The S&P 500 is down more than 20 percent since 2000, while the Nasdaq is down about 65 percent.

It can make you wonder if there's any safe place to invest some cash for, say, three-to-five years. What do you do if you want to save for a down payment on a house? You may figure you'll be sleeping with the fishes if you buy stocks.

To be sure, finding the perfect funds for short-term investing needs is a lot tougher than it used to be. But you might have better success with balanced funds, also known as "hybrids," which invest in a mix of stocks and bonds.

Ironically, one of the oldest funds around is a good bet for short-term investing goals. Vanguard Wellington, at the ripe old age of 73, invests in dividend-paying stocks and high-quality corporate bonds, said manager Ernst von Metzsch. (Vanguard was founded in 1975, but the company evolved from ties to an older firm, Wellington Management Co.)

A good fund for short-term needs:       1. Invests in stocks and bonds to lower risk • 2. Beats the S&P 500 over three and five years • 3. Has an expense ratio under 1 percent

"Capital preservation is important to us," von Metzsch said.

The fund, with $22 billion in assets, has a three-year return of 7.3 percent and a five-year average of nearly 11 percent, according to Morningstar.

The fund's charter requires 80 percent of its stock holdings to pay a dividend yield. That has meant a portfolio heavier in industrials and basic materials and lighter in technology. The fund pays investors an annual dividend yield of about 3.9 percent in addition to the stock and bond appreciation.

Top stock holdings include Alcoa, Citigroup and IBM. The fund also owns energy stocks such as ChevronTexaco and health-care names such as Procter & Gamble.

In fixed income, the fund is prepared for tougher times with bonds at the end of a record rate-cutting cycle. The fund's high-quality corporate bonds won't feel the sting as much from rising interest rates, and they should perform better in a stronger economy, von Metzsch said.

Vanguard Wellington is also cheap, with an expense ratio of 0.36 percent, practically unheard of for an actively managed fund.

Another solid choice for short-term investors is Dodge & Cox Balanced, with three-year annualized returns of 12.4 percent, according to Morningstar.

The fund, at 71 years old, also has a long-term record to boast about, beating the S&P 500 over five and 10 years with annualized returns of about 13 percent. And that's with a 35 percent weighting in bonds.

"I'm a huge fan of Dodge & Cox," said Peter Di Teresa, an analyst at Morningstar. "Their numbers are remarkably good."

The fund, with $6.2 billion in assets, invests about 60 percent of the portfolio in stocks. Manager John Gunn looks for battered shares overlooked by Wall Street. In bonds, the fund likes more conservative shorter-duration issues, as well as corporate bonds and inflation-indexed bonds.

You also can't beat the cost of Dodge & Cox, with an expense ratio of just 0.53 percent.

A third option for short-term investors is predictable, albeit dull, money market funds.

With a yield of just 1.4 percent, they haven't been setting the world on fire. But the advantage of money market funds is they provide the safest place outside a bank account to park your cash. While they aren't insured by the Federal Deposit Insurance Corp. (FDIC), a retail investor has never lost money in one, according to Peter Crane, vice president of iMoneyNet, which tracks money market funds.

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And even though the yield is at its lowest level since 1992, it probably won't stay that way, thanks to the Federal Reserve. The Fed's hint about a rate hike down the road would improve the outlook for money markets, Crane said.

There are 1,000 money market funds to choose from, but don't sweat it if you're not sure where to start. The name isn't as important as other factors, Crane said. First, look for a fund with a yield of at least 1.4 percent, the average for the category. Don't go for the highest yields because those managers are taking the most risks. Next, make sure it has an expense ratio no higher than the average of 0.45 percent.