Still, many investors today are choosing to keep their savings somewhere else. Options include bank certificates of deposit, money market funds and other government securities. Ready cash earns the most today in money market mutual funds, available at mutual-fund groups and brokerage firms. Taxable funds currently yield an average of 5.16 percent, compared with just 1 percent to 2 percent in bank savings accounts. Taxable funds that invest in insured government securities yield 5.08 percent.
Money funds are as liquid as checking accounts.
You can take out cash whenever you want, without penalty, and even write checks against the account. They net even more than you'd get from three-month Treasuries, after tax. For longer-term savings, Ames has been using various types of bond mutual funds. Medium-term bond funds currently yield around 5.54 percent in dividends, according to Lipper, a firm that tracks fund returns. But bond-fund returns aren't guaranteed the way Treasury securities are.