How to squeeze more out of your cash in a low-rate world

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Near-zero short-term interest rates are murder on risk-averse savers who have cash in banks and money market mutual funds. Now imagine that the Federal Reserve might keep rates at these levels not just through 2010 but beyond because of the anemic economy.

Given that possibility, my weekend column in The Times looks at some strategies for savers to squeeze more out of their cash accounts while keeping their principal safe.

That’s really the issue for millions of people whose bank and money market accounts add up to trillions of dollars: Yes, they could chase higher returns in stocks, bonds, gold and other investments, but for many their cash is principal that they absolutely can’t afford to lose. Plenty of Americans learned the hard way last year that cash provides peace of mind that other assets can’t -- even if, in the long run, they know that short-term accounts face the risk of being chewed up by inflation and a falling dollar.

If you’ve got to stay short, make the most of it. Let someone else subsidize the lowest-yielding banks and money market funds.

Read the column here.

Just FYI, I will be out for the next two weeks, and probably won’t be posting much on the blog in that period (though my Times colleagues on Money & Co. will keep it going). Happy Thanksgiving to all.

-- Tom Petruno