It is important to ensure that whatever savings you may have accumulated are not eroded or disappear by your making the wrong choices. Clearly it is not sufficient to merely stash the cash under the mattress.

One major consideration is the part that the tax man will take.  A recent article discusses how Insurance policies can unlock secrets to some tax savings. They can be used to pay death taxes or even for tax-free accumulation of capital.

More fundamentally, there is the question of what are the best places to be holding that cash right now.   Here are some of the options (the notes apply to the USA and more details are given in the link):

• SAVINGS ACCOUNTS – are easily accessible and are guaranteed for up to $250,000 by the Federal Deposit Insurance Corp.
• MONEY-MARKET ACCOUNTS -  bank products, as opposed to mutual funds — are among the safest places to keep cash but also have low rates.
• CDs – Short-term bank CDs (Certificates of Deposit) are FDIC-insured up to $250,000 per person per institution and generally offer higher yields than the other basic options.

Perhaps the most important advice is to be found at the foot of that item and is worth repeating here.

1. Make sure you either have or are building an emergency fund.
2. Be sure to have the insurance you’re supposed to have: health insurance, renters or homeowners insurance, and life insurance if someone else is dependent on your income.
3. Save faithfully for retirement.
4. If you have high-interest debt, work on paying that down.

Perhaps that should really have appeared at the start of the article.  It sets the parameters for what you should be safeguarding.

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