Lack of Interest

September 16, 2008
Physician's Money Digest, July15 2003, Volume 10, Issue 13

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; and NetBank (888-256-6932;, 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;, can return between 2% and 3%, but your principalcan be at risk if interest rates go up. Old-fashioned Series EE savings bonds(, 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.