Making Sure Investments Beat Inflation

With inflation on the rise and "safe" investments offering paltry returns, it's important to make sure you're not actually losing money on your CDs, money-market accounts or bonds.

As the stock market began to retreat toward the end of 2007, investors flocked to more conservative assets that generally offer lower returns with less risk. At the same time, the Federal Reserve started to cut its benchmark interest rate, which is now at about 2%. Other interest rates followed suit.

The current inflation rate is about 4%. Yields on money-market mutual funds are near 2%, on average, according to the most recent Money Fund Report. Savings-account rates are generally lower, and yields on Treasury bonds with a term of 10 years or less are all under 4% as well.

Certificate-of-deposit rates offer slightly better returns, and have come up from a recent downturn. The longer the term, the better the rate, and credit unions can sometimes offer better deals than banks. ...