NEW YORK (Money Magazine) - Most investors don't have particularly sophisticated strategies for handling their cash. That's understandable since cash played such a minor role for most of us in recent years (we pumped our assets into stocks as quickly as possible).

The usual routine was to just stick some of it in a certificate of deposit and go back to checking on our stocks. But if you choose to use cash as a portfolio counterweight instead of bonds -- and as a liquid pool to have available for opportunities -- the cash portion of your portfolio may be larger than usual. That makes the impact of smart cash strategies that much more important, even if the yields being offered these days are quite small.

To start, your bill-paying money should probably stay where it is. "When it comes to liquidity needs, convenience is the most important factor," says Peter Crane of iMoneyNet. But with your larger pot of cash -- your investment cash -- go after the best yields you can find.

Financial institutions have made it much easier to move money from one firm to another. So you can keep the bulk of your cash in these higher-yielding accounts and funnel money to your bill-paying account when needed.

The competition among banks for assets is producing some very attractive "teaser" rates. Start comparison shopping at CNN/Money's interest rate page. Once you've spotted the best rate, though, be sure to read the fine print. Some accounts will lock in your money for a fixed period of time, like a CD; others will drop that alluring teaser rate after only three months.

Winning the rate game does require a little elbow grease. But it can pay off. Suppose you had $20,000 in the Fidelity money fund you use to pay bills (it yielded 1.5 percent recently) and $100,000 parked temporarily in your checking account, which yields, say, 1 percent.

If you moved the $100,000 to ING Direct's Orange savings account, which yielded 2.75 percent, or Washington Mutual's Platinum Account, which yielded 3 percent, that $100,000 would have made $1,750 and $2,000 more a year, respectively (before taxes). That assumes those rates stay fixed. But even if those rates drop in three months, you'll still have made some extra cash. And at that point, you can easily move on.

One last note: If cash has also been building up in your retirement account, there are appealing options called stable-value funds in many 401(k) plans (also known as capital-preservation or retirement income funds).

Stable-value funds are, in essence, short-term bond funds that offer the stability of money-market funds. The average fund yields 5.5 percent, well above the average 1.2 percent rate on money-market funds and the 4.1 percent average for short-term bond funds. If only these funds were available to all income investors, we'd recommend them for everyone.