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Financial Q&A: The best places to stash your cash.

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Q: I need to diversify my cash deposits. Where can I safely deposit my cash?

M.J.B., Laguna Niguel, Calif.

A: Amid the financial-market meltdown, you are not alone in wondering how to protect your investments. For the time being, cash is king.

For absolute safety, Joseph Birkhofer, a certified financial planner in Houston, points first to bank accounts. Savers got some relief Oct. 3, when President Bush signed emergency legislation that temporarily lifts FDIC insurance on those accounts to $250,000. It reverts to the old $100,000 limit after Dec. 31, 2009. The insurance level on retirement accounts remains at $250,000.

There is a distinct difference between bank accounts and money-market funds, however, since the latter does not carry FDIC insurance, Mr. Birkhofer says.

While money-market funds are generally extremely safe, they often consist of overnight loans among companies, adding some volatility. The highest yields, and highest risks, come from a corporate-tied money-market funds. "Stepping down to a government-backed money-market fund is a wiser move," says Birkhofer.

Another option, he says: short-term Treasury notes and bills. These can be bought directly from the US Treasury at, but the process can be cumbersome. As an alternative, mutual funds made up of these government-backed IOUs are readily available to the public and can be sold quickly.

Repayment of Treasuries is backed by the "full faith and credit" of the US government. For security, it doesn't get any safer than that.


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