I think equity risk should be a much bigger concern for investors than interest rate risk. Investment grade bonds are down between 1% and 5% on the year. You can lose that much in an afternoon with stocks.
IMO, the 60% stocks in the Moderate Growth fund is much to risky for a time frame of 5-10 years. But I suppose that depends on how much you'll need the money at the end of that horizon.
David Swensen (in Unconventional Success) and Larry Swedroe (in several different books, I believe) provide guidelines for how much stocks one could reasonably hold with a time frame of x years. I posted this in greater detail here: viewtopic.php?p=398271#p398271
. For a 10 year horizon, they both agree you could take up to 70% equity risk, but for a 5 year horizon, you should have a max of about 20% to 30%. By the time you're 2-3 years away, you should have 0% stocks.
On the fixed income side, if you can't tolerate any loss, then CDs and savings accounts would probably be the way to go. Depending on how little risk you are willing to take, you might want to go 100% CDs, and skip the stocks altogether.
Don't assume I know what I'm talking about.