In case you haven't noticed, there's a lot of uncertainty in the market right now. Along with the European financial crisis, the budget battle and political posturing surrounding the 2012 election, uncertainty over Fed policy is driving a lot of rethinking about where to invest.

The biggest immediate concern is what will happen in debt markets once the Federal Reserve stops buying long-term Treasurys. Its "quantitative easing" program has kept long-term rates low, so in theory those rates should rise beginning in July after the Fed ceases its second wave of security purchases. Conflicting schools of thought see this playing out differently. Many believe that the Fed will continue to intervene to keep long-term rates low.

Forget about ever seeing short-term rates normalize in your lifetime. Since most of the $14 trillion national debt is financed in this market, every one-percentage-point rise in short-term rates would add $140 billion to the deficit. Imagine what three points would do. Expect the Fed to keep using the unemployment rate as its excuse for not raising rates even in the face of rising inflation.

My income investment strategy has been to diversify over a variety of income drivers so that no single adverse economic event can destroy the overall performance of a portfolio. This approach has worked well over the last two years because all sectors have benefited from a recovery from the financial crisis and the concurrent recession. Looking forward it seems clear, however, that some sectors face greater uncertainty than others. Some of this is due to recent run-ups in prices and some to a lack of predictable direction. Also, we cannot underestimate the emotional factors that often lead to perceptions trumping reality.

My most confident allocation is in adjustable-rate debt securities. These securities will benefit from a rise in interest rates, but they require a sacrifice of one to two percentage points in current yield. Since I expect rates to rise before year-end that is a small concession, especially if the security is trading below its par value.

Look for securities tied to the headline Consumer Price Index rather than the core CPI, which lags the true inflation rate by a significant amount when commodities like oil and foods are moving higher. One is Prudential Financial PRU - news - people ) (PFK, 27), which pays CPI plus 240 basis points. It currently yields 4.6%. A fund alternative is the Nuveen Tax-Advantaged Floating Rate Fund JFP - news - people ) (JFP, 2.5), which yields 5.9%. Note that Treasury Inflation-Protected Securities (TIPS) are not the best choice here, but if you like them, buy the iShares Barclays BCS - news - people ) TIPS ETF (TIP, 110) for its more favorable tax treatment. Allocate 30% of your portfolio to adjustable-rate securities.

The second area, where I recommend a 20% allocation, is energy, specifically oil. Yes, the big-appreciation gains are probably over, but the income payouts are still high and will likely rise. Look to buy Canadian oil and gas producers for your tax-sheltered account, as they are not subject to the 15% Canadian withholding tax. My choice here is Penn West Petroleum (PWE, 25), paying 4.4%. Buy master limited partnerships like Plains All American Pipeline PAA - news - people ) (PAA, 61), paying 6.3% for taxable accounts to obtain a high tax-deferred payout that can grow.

I'm allocating another 15% to stockmarket-linked securities. These include convertible securities like Wells Fargo WFC - news - people )'s 7.5% convertible preferred (WFC-L, 1,079), as well as closed-end funds that invest in stocks and use call option writing to enhance the yield. Look at Eaton Vance Tax-Managed Buy-Write Opportunities Fund ETV - news - people ) (ETV, 13), yielding a tax-advantaged 10%.

This final 35% of the portfolio should be in a combination of cash and gold. By holding cash you avoid having to make a sell decision, which can cloud the buy decision when an opportunity comes. Gold should be up to 10% of this total, using an ETF that holds bullion, such as SPDR Gold Trust (GLD, 149) or iShares Gold Trust (IAU, 15). Other commodity-based ETFs are available, but I prefer gold for its broader audience of buyers, more limited supply and longer history as a vehicle for wealth preservation.

In order to raise cash from your existing holdings, look to take some profits by reducing positions that have done well for you as well as by reducing your fixed-rate debt exposure. Then again, you could just raid your equities portfolio.