As you do this, of course you're faced with several choices. You've been disappointed in government bonds because of poor performance. For something relatively safe, you might consider Treasuries, but as I mentioned earlier, returns are currently very low. An alternative might be municipal bonds that offer higher return potential plus tax advantages. Even though we can never be sure that history will repeat itself, AAA-rated munis have a good track record, and the rating agencies consider them to be among the strongest as well.

Investment-grade corporate bonds might also be a good choice to consider right now because of higher return potential. But as with any investment, diversification is the key to help manage risk. This might be an excellent time to consult with a financial advisor about constructing a broadly diversified bond portfolio.

What to expect from stocks

While stocks are still scary for many people, I do believe that in the long run and with the right risk tolerance, they continue to make sense. Chances are we won't see the double-digit returns of recent years, but some experts predict long-term returns (over the next 20 years) on stocks of between 7-8 percent. That's significantly more than the likely return for bonds for the same period.

Here, too, diversification is essential, so make sure that your holdings are spread across large-cap, small-cap and international stocks -- and your portfolio includes a broad range of sectors and industries. This way you could be better positioned when the market turns around.

When it comes right down to it, being too "safe" can actually be risky. I believe that the three steps we outlined above will help you achieve both the cash you need for today and the growth you need for tomorrow. But because you are at such a critical time in your investing life, it could also make a lot of sense to consult with a financial advisor as you work out the details. Thanks for the question, and best of luck!