Why do you own a money market fund?

The drawback? Banks can change interest rates any time, and the overall trend in bank money market rates is still down, says Greg McBride, senior analyst for Bankrate.com. If you have to move your account every few months, you'll spend all your interest on blood-pressure medicine.

A better bet than a bank money market account might be a certificate of deposit. At these rates, you don't want to lock your money up for longer than a year, McBride says. With a CD, the bank will guarantee your rate for a while. And you can withdraw money early from a CD, although it will cost you as much as six months' interest.

•Income. Forget it. You're not getting any from a money fund. If you're terrified at the prospect of losses, then bank CDs are your best alternative. If you think you can weather a downturn or two, consider an intermediate-term bond fund. These funds buy bonds that mature in two to seven years and distribute the income, minus expenses, to investors.

Currently, intermediate-term muni bonds offer attractive yields, and interest is free from federal income taxes. How much risk are you taking? Not much. Consider Marshall Intermediate Tax-Free, a top-performing fund the past five years. Its worst 12-month period in a decade has been a loss of 0.5%, including reinvested interest.

With rates this low, a stockbroker's commission will cost you a year or more of interest. Even with no-load funds, which bypass brokers, you should keep expenses as low as possible. Five funds worth considering are in the chart. You won't get rich, but you might be able to afford a trip to the flea circus.

John Waggoner is a personal finance columnist for USA TODAY. His Investing column appears Fridays. new book,Bailout: What the Rescue of Bear Stearns and the Credit Crisis Mean for Your Investments, is available through John Wiley & Sons. Click here for an index of Investing columns. His e-mail is jwaggoner@usatoday.com. Twitter: www.twitter.com/johnwaggoner.

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