 Where
to stash cash
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 Dear
Dr. Don,
When you have a lot of cash, say $1 million to $2 million, and you
are not ready to buy another house just yet, what is the best thing
to do with the cash? I have some in a standard bank, and a lot in
an Internet account. It makes me nervous as FDIC insurance is only
$100,000, and I do not want to have 20 bank accounts. Your answer
is much appreciated.
-- Barbara Busload
 Dear
Barbara,
One option is to deposit your money with a financial institution
that offers the Certificate of Deposit Account Registry Service
or CDARS. Through a series of transactions that single deposit is
split among other participating institutions so your deposit is
fully insured.
The Bankrate feature, "CDARS:
An easy way to beat FDIC $100,000 limit," explains the
product in greater depth and includes a link to the CDARS web site.
Using CDARS you can have up to a $20 million deposit covered by
FDIC insurance yet managed through a single banking relationship.
Another approach to virtually risk-free investing is to set up
a TreasuryDirect account and invest in short-term U.S. Treasury
Bills. You can learn more about TreasuryDirect on its Web
site. The securities value will fluctuate with changes in market
interest rates, but the principal at maturity is guaranteed by the
U.S. government.
You've only given me one piece of your financial profile, but odds
are regardless of your plans in buying a new home, you're holding
on to too much cash. Take a look at the big picture in terms of
what goals you want your money to help you accomplish. Investing
your money in short-term, low-risk instruments keeps the principal
safe from a loss in value but increases the risk that it loses purchasing
power over time because of inflation.
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