'Rolling over' certificates

I am a 72-year-old woman and have $40,000 in 6-month certificates of deposit that are about to mature. Would you recommend I invest in a money market fund, a 21/2-year CD, or keep rolling over my existing CD?. -M.U.

To answer this question means giving instructions on how to play the interest-rate game. If short-term interest rates (such as for 6-month Treasury bills) are going down, and you think the downward trend will continue for some time, you want to ''lock in'' higher rates with certificates of deposit. But when rates are going up, you want to be able to ride the upturn and not be caught with a fixed-rate CD. That's when the money market fund makes more sense.

You'll have to do the research and decide for yourself which way you think interest rates are going to go. Already this year, rates have gone up, down, then up again.

However, with $40,000, I would not recommend putting it all in either money funds or CDs. If you decide rates are going down, you may want to invest about 75 percent in CDs and keep the other 25 percent in a money fund so you can respond to a sudden upward movement. And even when money funds look more attractive, many people prefer to have at least something in a fully insured deposit with a guaranteed return. If you are in this category, you might want to keep 25 percent of your money in CDs.