NEW YORK (CNNMoney.com) -
If you've managed to stash away some cash this year, congratulations -- the hard work's over. But managing your savings is one extra step that will make your effort even more worthwhile.
Letting your cash pile up in a checking account is easy, but those accounts usually offer low interest rates or none at all. "Your money (in these accounts) is losing value," said Stacy Francis, certified financial planner and owner of Francis Financial. "You're not even keeping up with inflation."
If you've ignored your savings all year, it's not too late to act. That's because the Federal Reserve has raised its benchmark short-term rate 12 straight times since last June, bringing interest rates to 4 percent -- a four-year high.
Deposit rates, such as those on savings and money market accounts, have been rising as well.
"There were many years where the Fed Funds rate was as low as 1 percent and interest rates on savings products were awful, but that has really turned around for savers," said Laura Bruce of Bankrate.com.
The best place to park your savings depends on your individual situation, such as how much risk you're willing to take on, how much access you need to your money and the type of return you want.
To maximize your savings, choose the situation that best describes you.
If you want ready access to your money: High-yield savings accounts are a great place to store your money if you want to be able to access your savings immediately, such as in times of emergency, Francis said.
Since savings deposits are guaranteed by the FDIC, they're also some of the safest bets around.
EmigrantDirect.com currently offers a 4 percent yield on its American Dream savings account, while the Orange savings account from ING Direct is offering 3.75 percent.
But if you want immediate access to these accounts and aren't comfortable transferring money online, make sure you have a way to get the money.
Francis suggests checking to see how many ATMs the bank has in your area or whether you have check-writing abilities.
If you don't need the money right away: Returns on certificates of deposit tend to be higher than money market and savings accounts because you have to lock in a fixed sum of money for a certain amount of time.
But, according to Bankrate.com's Bruce, you don't have to tie up your money for very long to get some favorable rates.
E*Trade offers a 6-month CD with a 4.56 percent yield, for instance, while the rate on its 5-year CD is only slightly higher at 5.15 percent.
Even if you don't need access to your money, it's best to stick to CDs with maturities of one year or less right now since longer-term rates aren't significantly higher than short-term ones, Bruce said.
If you're worried about inflation: I Bonds, which are issued by the Treasury Department and can be bought at most financial institutions, are designed to guarantee that the value of an investment isn't eroded over time by inflation.
The yield on the I Bond is based on a fixed yield component that stays with the bond its entire 30-year life, as well as an adjustable yield that changes twice a year and is pegged to the percentage change in consumer prices over a six-month period.
For example, if you purchase an I Bond right now, you'll earn a composite rate of about 6.7 percent. That's because the government's semiannual inflation rate right now is at 2.85 percent. On an annualized basis, that's 5.7 percent. When you add the current fixed rate of 1 percent to the adjusted rate of 5.7 percent, you get 6.7 percent.
While that yield may seem pretty high, don't forget it changes twice a year -- every time the inflation-pegged rate is updated. That means if the semiannual inflation rate falls to 1.5 percent during the bond's 30-year life, then the yield on an I Bond bought today will drop to just 4 percent.
For those investors who want to maintain the purchasing power of their investment, I Bonds are a good option. Also, since they're backed by the government, you can't lose your money.
But remember, with this option, you're just staying above water, Bruce said. Furthermore, since the bond has a 30-year maturity, you risk a relatively low rate of return if the inflation rate falls.
Click here for more about inflation-protected investments.
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