(MONEY Magazine) – Remember the good ol' days of 1989? Of course you do. Who could forget that a little over two years ago the average money-market mutual fund yielded a robust 9.2%? Savers then could hardly go wrong. But ever since -- as the fever line on these pages illustrates -- that once healthy yield has sagged toward collapse. In late June it barely flickered at 5.6%. And as the table at right shows, most of the other cash-stashing havens are similarly somnolent now. So what's a safety-conscious saver to do? Above all, don't fall for the highest yields you see in the market these days. The alluring rate often comes on an investment too risky to qualify as a sensible alternative for your liquid savings. Two such: long-term tax-exempt bond funds and mortgage-backed securities or Ginnie Mae (GNMA) funds. Add to that list two new short-term products being pushed by commission-hungry brokers: funds investing in foreign currency or bonds and in adjustable-rate mortgages (ARMs). While 12-month returns on these four investments have been tantalizing, averaging from 9.4% to 12.2%, they come at a price. Many world-income and ARM funds have yield- sapping sales charges, and the longer-term choices carry substantial interest-rate risk. That's the killer that slices your bond fund's share price -- your principal -- when interest rates rise. The trick to boosting your savings yield today is to become a black-belt shopper among money-market funds and CDs. Or you can extend the maturity of your cash stash while still keeping it below the two to three years that most advisers consider safe for such savings. Here are today's best savings options, starting with the least risky: -- Money funds. You'll have to stay put in this category if you're unwilling to risk any drop in principal and don't want to tie up your money in, say, a CD. But you can eke out a better than average yield by carefully shopping the money fund market for the highest payouts. Examples: Olde Premium (800-225-3863), which recently carried a seven-day compound yield of 6.5%, and Dreyfus Worldwide Dollar (800-782-6620) at 6.3%, each paying nearly a full percentage point more than the average money fund. Certain tax-free money funds offer an even better deal. On a seven-day compounded basis, for example, Strong Municipal (800-368-3863), paying a tax-free 5.1%, recently yielded the equivalent of a before-tax 7.4% for investors in the 31% tax bracket; for Evergreen Tax-Exempt (800-235-0064), at a tax-free 4.6%, the figure was 6.7%. -- Certificates of deposit. Look to one-year CDs. First Federal Savings Bank of Delaware (302-421-3564) and California Thrift & Loan (800-852-0587), for example, recently offered a one-year CD paying 6.9%, compared with a yield of 6.2% for the average one-year CD. Both banks are rated among the financially soundest by Veribanc, a rating analysis service. (For more on high-yielding CDs, see Scorecard on page 17.) -- Treasuries. The one-year Treasury bill gives you a safe 6% provided that you hold it to maturity. If you're willing to tie up your dough longer, you can get 7% on a two-year Treasury. The risk in both cases: if you're forced to sell your notes prior to maturity and interest rates are rising, you'll have to take a loss on your investment. You can buy T-bills in $10,000 denominations ($5,000 for notes up to four years) at no sales charge through Federal Reserve banks. -- Short-term bond funds. These funds, which invest in U.S. Government, municipal and corporate securities maturing in one to five years, are a worthy alternative to money funds for certain savers. ''You get monthly income, there's little or no credit risk, and the funds are virtually as liquid as a money-market fund,'' says Michael Ross, a bond analyst in the Chicago office of Kemper Securities. But there are significant differences as well: the prices of shares fluctuate not only because of changes in interest rates, but also because a bond fund is constantly buying and selling securities, realizing capital gains or losses. Result: a total return that can be more -- or less -- than your yield. While interest-rate risk is about equal, munis and corporates typically yield a couple of tenths of a percentage point more than U.S. Government funds do because they also carry credit risk -- the possibility that an issuer could default. But sticking with top-grade, well-diversified funds like the ones mentioned below sharply narrows the chance of this happening. | Among U.S. Government short-termers, one star performer, Delaware Group: Treasury Reserves II (800-523-4640), recently yielded 7.1% with a 10.8% total return for the year that ended May 31. Vanguard's Short-Term Government (800-662-7447), another top fund yielding 7.3%, scored a 10.8% return for the same period. As for muni funds, you're best off to limit your selection to national ones rather than those that invest in the bonds of a single state. The single- staters' plumper after-tax yields may cover frightening fiscal ills that could bring on default (see Fund Watch, June). You also want a fund that invests primarily in general-obligation bonds graded double A or better by such rating services as Moody's or Standard & Poor's. Two candidates: Fidelity Spartan Short-Intermediate Term Muni (800-544-8888), with a $10,000 minimum, yields the taxpayer in the 31% bracket the equivalent of a taxable 8.5% and had a total return of 8% for the 12 months that ended May 31; and Vanguard Municipal Bond Limited Term (800-662-7447), with a tax-equivalent yield of 7.7%, had an 8.8% total return for the same period. Among short-term corporate bond funds, stars include Scudder Short-Term (800-225-2470), 9.3% yield with a 13.7% total return for the year that ended May 31; and Babson Bond Trust S (800-422-2766), 8.3% yield and an 11.1% return for the same period.

CHART: NOT AVAILABLE CREDIT: MARIA TAFFERA CAPTION: NO CAPTION

CHART: NOT AVAILABLE CREDIT: Sources: IBC/Donoqhue's Money Fund Report, Bank Rate Monitor, Lipper Analytical Services. CAPTION: WHAT EIGHT POPULAR SAVINGS STASHES PAY NOW Compare the yields on your savings with these recent averages -- most at least two percentage points lower than in 1989. By following the advice in the accompanying article, you can beat these benchmarks.