Government-insured investments

These are typically savings accounts or certificates of deposit offered by banks, credit unions, and stockbrokers. You can find up-to-date interest rate information at www.bankrate.com. Bank accounts are insured up to $250,000 per person (not per account) at a single institution by the Federal Deposit Insurance Corporation (call 1-877-ASK-FDIC to check), and up to $250,000 per depositor at a a single institution for certain accounts such as Individual Retirement Accounts (IRAs). Credit union accounts may be insured by the National Credit Union Administration up to $250,000 (visit www.mycreditunion.gov to check). Because they carry minimal risk, these investments typically pay lower rates of return. They include:

Interest-earning checking accounts. These may have minimum deposit requirements. Check to see if there are penalties for falling below the minimum.

Savings accounts. Find out whether a minimum deposit is required. Some institutions allow a small sum to start.

Certificates of deposit (CD). CDs are available through a bank or stockbroker for a specific time period, usually three months to five years. Only bank CDs are FDIC insured. Generally, longer investment periods earn higher interest rates. There may be penalties for withdrawing the money before the end of the agreed-upon time period. Look for an interest rate that is compounded rather than simple - it will grow faster. Ask these questions: What is the annual yield? How long does the rate remain in effect? When does the CD "come due" - meaning, when does your investment period end - and will you be notified? Is the money automatically "rolled over" if you forget to claim it at the right time - and could it then wind up in a lower rate CD?

Money market accounts. These typically earn a higher interest rate than an ordinary checking or savings account, but you must usually maintain a minimum balance. There could be penalties for certain withdrawals; and you may only be able to write a maximum of three checks per month against the account. Check all terms with the provider before investing, and be sure you understand all the details. Not all money market funds are FDIC guaranteed.

Hot investing tip: limit the number of choices

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