The Fed Just Slashed Interest Rates. Here’s Where to Stash Your Cash Now

Brokerage firms and mutual fund companies also have money market mutual funds, which are not insured by the federal government. You want to make sure you have a federal money market fund that invests in securities issued by the U.S. Treasury or an agency of the U.S. government. Otherwise, you could lose some of your principal or find out you can’t get your money back for a while.

2. High-yield savings accounts

As the Fed lowers interest rates, high-yield savings accounts — a popular option during the past four years due to their attractive interest rates — will start paying less, but they’ll still be a secure place to store savings in general. Like bank money market accounts, high-yield savings accounts at banks and credit unions are also backed by the FDIC or NCUA, but they generally don’t offer check-writing privileges. Because of that, they typically pay a bit more than money market accounts. This week the best high-yield savings accounts on DepositAccounts.com offered around 5.33 percent, which amounts to interest of $533 a year on $10,000.

3. Certificates of deposit (CDs)

A CD is a deposit at a bank or credit union that earns interest on a lump sum for a fixed period. You typically must leave it for that agreed-upon period of time or you will be charged a penalty. People who bought CDs in recent years will continue to earn high yields, since CD interest rates are locked in at the time of purchase, but rates on new CDs will likely tick down along with Fed rate cuts.

According to recent NerdWallet data, the best one-year CDs offered as high as 5.15 percent interest, or $515 a year for a $10,000 deposit. The same insurance limits apply to CDs as to any other bank account.

4. U.S. Treasury bills

The only thing safer than money backed by the FDIC or NCUA is money directly backed by the U.S. Treasury, and there is no $250,000-per-institution limit. These are like CDs, only they can be sold in the open market. They are also state-tax exempt, meaning you only have to pay federal taxes on the interest. Short-term rates happen to be higher than long-term rates right now. A one-year Treasury bill was yielding 3.84 percent on Sept. 17, or $384 a year for each $10,000.  If you live in a high tax state, this could yield even more than a CD after taxes, because Treasury bill interest is free from state and local taxes.

Treasury bills can be bought through most financial institutions, including investment firms such as Fidelity, Schwab and Vanguard. They can also be purchased at banks or from the U.S. government through TreasuryDirect.gov.

5. Treasury Inflation Protected Securities (TIPS)

TIPs pay a fixed amount of return plus inflation, measured by the consumer price index (CPI). Like Treasury bills, they are backed by the U.S. government, interest is exempt from state taxes, and you can sell them in the open market if you don’t want to wait until they mature. You can purchase them at the same places you buy Treasury bills.

The shortest period the U.S. government issues TIPS for is five years. Recently, TIPS that matured in five years yielded 2.125 percent, plus inflation, according to TreasuryDirect.gov. That equates to $212.50, plus whatever inflation turns out to be for each $10,000 invested.