Okay, I know the headline makes me sound like a salesman on an infomercial. But it really is time to move the money from underneath the mattress. Treasuries, bank certificates of deposit and money-market funds offer puny yields. They are, in a word, unattractive.

Stocks are appealing at their current levels, but the road to higher prices will be bumpy, and stocks are, of course, much riskier than high-quality bonds.

After taking a horrible beating, stocks are now priced for a bitter recession. In other words, stocks should rise from here unless the economy worsens even more than most economists and market strategists expect.

At their lows in late November and early December, bonds had discounted a depression. If the future brings anything rosier than that, their prices, which have already started rising from earlier lows, should appreciate further (that will lead to lower yields because bond prices move inversely with yields). Investment-grade corporate bonds could easily return 10 percent or more this year.

Most investors shouldn't put too much of their money into bonds. After all, stocks have returned an annualized 10 percent since 1926 while bonds have returned only about half that. When the economy turns around, stocks are bound to do better than bonds.

But if you're nearing or are already in retirement, you ought to have 40 percent to 50 percent of your money in bonds. Bonds don't bounce around in price the way stocks do -- plus, they're priced to give you fine returns over the next year or so.

"Bonds have one-third the volatility of stocks," says Mark Kiesel, head of investment-grade bonds at Pimco. "I can earn 7 percent to 10 percent on corporate bonds and take one-third the risk of stocks." Bargains also abound among tax-free municipal bonds.

For several years, Pimco favored Treasuries and safe mortgages securities. "But six months ago, we began aggressively investing in high-grade corporates," says Kiesel, who sees the economy bottoming in the third or fourth quarter of the year and then beginning a gradual recovery.

Meanwhile, despite the recent rally, you can still find investment-grade corporate bonds with maturities of 15 to 20 years yielding more than 6 percent.

But yield is hardly the whole story. The prices of corporate bonds have been beaten down as a result of the credit crunch and concerns about the health of the economy. The differences in yields between Treasuries and most other bonds are higher than they have been since the 1930s.

Robert Auwaerter, head of fixed income at Vanguard, is as bullish as Kiesel on bonds. Bonds have rallied some, "but there's still plenty of opportunity in this market," he says.

WHERE TO TURN

Auwaerter recommends short- and intermediate-term bonds. Assuming the federal government is successful in pumping up the economy, inflation is sure to follow -- and that will hurt long-term bond prices. Continued...