Keep it short.

That sound advice applies not only to speeches at wedding dinners but also to the duration of your fixed-income investments in 2009.

Interest-rate yields are likely to remain stuck at current low levels for a while, with nothing on the horizon to drive them lower. Once the economy starts to recover, however, inflation can be expected to revive and bring with it higher interest rates.

That's why you shouldn't lock in today's rates for too long.

Most people feel—and we agree—that at the back end of this recession there will be pressure on interest rates to move higher," says William Hornbarger, fixed income strategist for Wachovia Securities, in St. Louis. "People investing now who stay ultra-conservative and short-term are going to earn about 3 percent, while earning more than that opens them to a lot of risks of duration and credit."

With recession, banking problems, and uncertain stimulus results hovering, investors should stay conservative and cautious, Hornbarger says.

High-quality credit is especially important.

"In either municipal or corporate bonds you don't want the average bond maturity to be more than five to eight years," says Ray Ferrara, a certified financial planner and president and chief executive of ProVise Management Group LLC, in Clearwater, Fla. "You should also 'ladder' your bond portfolio."

A ladder is a portfolio of different bonds maturing at various intervals. This insulates you from rate fluctuations and lets you take advantage of positive rate moves whenever possible by moving to those higher rates when the shortest-term investments come due.

For example, you can build a ladder of bonds that mature in two, four, six, eight, 10, and 12 years to come up with a seven-year bond average, Ferrara says.

"We believe the Bush and Obama packages plus Federal Reserve liquidity run a very good possibility of creating inflation somewhere down the road," adds Ferrara. "If I were an adviser to President Obama, I would tell him his greatest economic concern is not solving problems of today, but controlling inflation tomorrow and the rising interest rates that rise from that."

The "keep it short" admonishment also relates to bank investments because you aren't being rewarded for longer-term commitments. Yet, while yields on bank money-market accounts and certificates of deposit are extremely low, so is inflation.

"We are unlikely to see significant improvement in CD and money-market rates until there is an economic turnaround with increased prospects," says Greg McBride, senior financial analyst with Bankrate.com, in North Palm Beach, Fla.

"It makes no sense to invest now in long-term rates that could be wiped out later by higher inflation," McBride says.

Money-market accounts were yielding about a half-percent recently, and nonbank money-market funds less than that. Meanwhile, six-month certificates of deposit have averaged just over 1 percent, one-year CDs under 1.5 percent, and five-year CDs around 2.25 percent.

"With 2.9 million people in this country unemployed more than six months, that indicates that you can't have too much in liquid, emergency savings," McBride says.

Bond mutual funds and, more recently, exchange-traded bond funds are popular fixed-income choices providing diversity.

"Regardless of the economic picture, you're going to want a bond fund manager with long experience who has gone through a few credit cycles," says Lawrence Jones, associate director of fund analysis for Morningstar Inc., in Chicago. "You need someone with that perspective, not someone who has only managed during a bull market."

Lacking insightful leadership, numerous bond funds have tanked during the downturn.

One of today's best-known bond fund managers is Bill Gross, of Pimco Total Return Fund, a $138 billion portfolio invested in AAA- and AA-rated bonds with an average maturity of six years.

As manager since 1987, Gross has displayed the savvy to roll with economic punches.

Pimco Total Return Fund "A" (PTTAX) has one-year total return of around 1.50 percent, three-year annualized return of 5 percent, five-year annualized return of 4 percent, and 10-year annualized return of 6 percent. All rank in the top one-fourth of intermediate-term bond funds.

"From 2005 on, Gross and his Pimco team were increasingly negative about prospects of the housing market," Jones says. "So they avoided the subprime areas of the bond market."

That focus on quality securities led to their putting a significant amount of the portfolio into mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac. Though that mortgage sector continues to experience stress, it held up better than most other segments.

The fund more recently ventured into the low-priced debt of investment-grade financial firms such as JPMorgan Chase, Goldman Sachs, and Bank of America because the government now has a stake in protecting them.

"Mutual funds and exchange-traded funds are the way to go in bond investing because it is difficult for an average investor to accurately gauge risks of an individual bond," Jones says. "If you have a large sum to invest, an ETF is a good way to invest, but if you try to 'dollar-cost-average' (invest a set sum regularly) you'll get killed with brokerage commissions for each ETF trade."

Among bond ETFs is the $8.6 billion iShares iBoxx $ Investment Grade Corporate Bond Fund (LQD). However, hurt by heavy exposure to bonds of financial companies, it is down 5.5 percent the past year with a five-year annualized return of 1 percent.