Market Maven
By George Mannes

(MONEY Magazine) – Q I have 11 Series EE U.S. Savings Bonds, each with a face value of $100, that I bought from 1989 to 1991. Should I cash them in and add the money to my mutual funds? --Graylyn Tanner-Rice, Melrose, Fla.

ANSWER Hold on to those bonds. They date back to a time when Uncle Sam treated his lenders more generously. They're guaranteed to yield 4%. That rate, which you can expect until the bonds start to reach maturity in 14 years, is better than the 3.5% you'd earn on new Series EE bonds. And it's competitive with the returns you'd get from similar investments such as CDs or government bond funds, says Kathleen Rehl, a financial planner in Land O'Lakes, Fla. Plus the interest you earn on savings bonds is exempt from state income taxes. True, you might do better than 4% if you cashed out and rolled the proceeds into a mutual fund, but why bother? As Rehl points out, everyone needs to keep three to six months' living expenses in a safe, easily accessed emergency fund. Consider your savings bonds part of that stash.

Q I'm saving $700 a month for my children to attend private school starting in the fall. Tuition is due semiannually. How can I maximize my return while keeping the money safe and liquid? --Susan Hermann, Orland Park, Ill.

ANSWER Buy short-term certificates of deposit, advises Cindy Menker, a planner at Contour Financial in your hometown. They yield more than a money-market fund today. And unlike with fixed-income mutual funds, there's no risk of losing money. To get the most yield, pick the longest maturity you can, as long as the CDs mature before the tuition comes due. (If you made early withdrawals, the interest penalties would spoil the strategy.) Not all banks, however, make it easy to buy a $700 CD every month. One that does is GMAC Bank (, which in May was offering a six-month CD with an annualized yield of 3.65%, for minimum deposits of $500.