Where to Stash Your Cash Now

I set up my high-yield savings account to get quick access in two ways. First, I link it to my checking account so I can do a free online transfer known as an ACH transfer, which takes a week or less. To get immediate access, I keep a very small money market account at the same bank that allows me to instantaneously transfer funds from my savings account so I can immediately write a check. Because it’s the same institution, there is no delay or hold put on the money.

3. Certificates of deposit (CDs)

A CD is a deposit at a bank or credit union that earns interest on a lump sum for a fixed period. You typically must leave it for that agreed-upon period of time or you will be charged a penalty. According to DepositAccounts.com and Bankrate.com, the highest yielding one-year CD is paying 5.3 percent or about $530 per $10,000. The same insurance limits apply to CDs as to any other bank account.

4. U.S. Treasury bills

The only thing safer than money backed by the FDIC or NCUA is money directly backed by the U.S. Treasury and there is no $250,000 per institution limit. These are like CDs, only they can be sold in the open market. They are also state-tax exempt, meaning you only have to pay federal taxes on the interest. Short-term rates happen to be higher than long-term rates right now. A one-year Treasury is yielding 5.1 percent, or $510 a year for each $10,000. If you live in a high tax state, this could yield even more than a CD after taxes, because Treasury bill interest is free from state and local taxes.

These can be bought through most financial institutions, including investment firms such as Fidelity, Schwab and Vanguard. They can also be purchased at banks or from the U.S. government through TreasuryDirect.gov.

5. Treasury Inflation Protected Securities (TIPS)

While any of the above four places to stash cash are attractive compared with low- or no-yield accounts, we don’t know if they will earn more than the rate of inflation, which we all painfully know was high last year. TIPS are similar to I bonds only better right now, as I recently wrote. They pay a fixed amount plus inflation, measured by the consumer price index (CPI). Like Treasury bills, they are backed by the U.S. government, interest is exempt from state taxes, and you can sell them in the open market if you don’t want to wait until they mature. You can buy them at the same places you buy Treasury bills.

The shortest period the U.S. government issues TIPS for is five years. But you can buy TIPS from someone else through a brokerage, such as those mentioned earlier. Recently, TIPS that matured in one year yielded 1.56 percent, plus inflation. That equates to $156 plus whatever inflation turns out to be for each $10,000 invested.

When I ask someone if I can buy an hour of their time for $200, I typically get an enthusiastic positive response. Well, many of those same people could earn thousands of dollars more for that hour of their time. Perhaps you can as well. After you stash your cash in something safe and high yielding, give yourself a reward. For example, if you make an extra $1,000 that first year, take half and treat yourself to something you want with that extra cash. You deserve it.