Money Havens

Never before have Americans faced such an array of savings choices.

Some of the options:

The Mattress. Keeping cash at home ensures that it will always be close at hand and safe, assuming that it is protected from theft and fire. Disadvantage: at current rates of inflation, the money will lose about 10% in value each year.

Savings Account. Money deposited in a savings account can be easily withdrawn at any time and is insured by the Federal Government for up to $100,000. Disadvantage: the interest is a low 5.25% at a bank or 5.5% at a savings and loan or savings bank.

Savings Certificates. Time deposits offered by banks and S and Ls pay more interest than a savings account, and they are still insured by the Government. The most popular certificate today has a maturity of 2 1/2 years and pays 12% interest. Disadvantage: if the money is withdrawn early, the saver loses a substantial part of his interest.

Money-Market Certificate. This six-month, Government-insured time deposit in a bank or thrift institution pays high interest (last week: 15.9%). Disadvantage: $10,000 minimum and a penalty for early withdrawal.

Treasury Bills. Known as T-bills, these are securities sold by the Government to finance the national debt. Since they are backed by the U.S. Treasury, they are safe and the interest is not taxed by state or local governments. They usually have a maturity of three months to a year. The interest on 90-day T-bills is currently 14.80%. Disadvantage: the minimum denomination is $10,000.

Money-Market Funds. These are portfolios of high-interest securities sold to investors as a mutual fund. The customer can usually write checks against the account. The deposits are not insured by the Government, but the funds are generally sound. Disadvantage: interest rates fluctuate on a daily basis, and thus the current high yields (last week: about 17%) would fall sharply and quickly if general interest rates come down.

Commercial Paper. This is a short-term corporate IOU that is not backed by any collateral. The safety depends on the soundness of the corporation issuing it. Commercial paper and large certificates of deposit currently pay the highest rate of interest available to most individuals, about 17.50%. Disadvantage: the minimum investment is usually $100,000.

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