Lack of Interest

If you've parked your cash in a moneymarket fund, you're probably earningless than the inflation rate on your holdings.To squeeze out a few more pointsof yield, look into online banks like INGDirect (800-ING-DIRECT; www.ingdirect.com) and NetBank (888-256-6932; www.netbank.com), which are currently offering yields around 2.3%. Short-term bondfunds with low expense ratios, like Vanguard's Short-Term Bond Index fund (800-635-1511; www.vanguard.com), can return between 2% and 3%, but your principalcan be at risk if interest rates go up. Old-fashioned Series EE savings bonds(www.publicdebt.treas.gov), with a current2.66% yield, have become a popularplace to store spare cash. Interest is tax deferreduntil you cash the bond, but youmust hold bonds for at least 1 year beforeyou can redeem them, and there is apenalty if you cash out within 5 years ofthe bond's issue date.