Savings Accounts and Insured Market-Rate Accounts
Short-term money that you need for emergencies and goals that need your cash in the next year should be kept in savings accounts and insured market-rate accounts (IMRAs). Savings accounts pay the lowest rates of interest.

IMRAs pay higher interest, require a minimum balance (typically $2,500), and allow a set number of withdrawals (typically three per month). You should compare the rates at different banks and credit unions. Credit unions generally pay higher rates than banks. Internet banks have lower costs and may pay higher rates. You can compare savings and IMRA rates at http://www.bankrate.com.

Certificates of Deposit
Certificates of deposit pay higher rates than savings accounts when you tie up your money for specific periods of time. You can invest in a CD for various time lengths, from one month to seven years. If you take your money out sooner, you will lose three months' interest, so plan your investment carefully.

CDs have minimum-balance requirements-usually $500. You can accumulate money in a savings account and move it to a CD when you have enough to safely invest. Most credit unions and banks do not let you add money to a CD. But some do, so check on this. If rates go down, you may be able to put money into an existing CD at a higher rate than you could obtain for a new CD. Many credit unions and banks offer step-up CDs, which benefit the investor if rates go up. You are allowed to adjust the rate on your CD (to a higher market rate) one time during the CD's term.

CDs may be opened at any credit union or bank; rates are usually posted in the bank and online. You can also compare rates at http://www.bankrate.com. Some banks offer benefits for opening a CD, ask before you lock up your money. It's easier to move your money around between accounts at the same bank, rather than from bank to bank.

U.S. Savings Bonds
U.S. Savings Bonds may be purchased for intermediate goals-more than five years in the future. During the first year, you cannot cash in the bonds. You can cash them in anytime after that, but you won't get the best return unless you hold the bonds for at least five years. When cashing in your bonds, be sure to do it soon after interest is credited. Otherwise, you may lose as much as six months' worth of interest. For more information, see http://www.savingsbonds.gov.

Fixed-Income Mutual Funds
You may be tempted to invest in so-called short/intermediate-term fixed-income mutual funds. You can lose a substantial amount of your investment if interest rates increase and you must spend the funds.