If you took out a certificate of deposit a few years ago, when banks were still paying respectable interest rates, you might have thought of it as an investment. But now, with rates as low as they are, think of the money as savings. And the way to manage savings is to earmark the money for when you're going to need it: immediately, in a few years, or perhaps not for 10 years or more. That will point you toward the best place to put the money now.

-- Cash reserve. Your current bank is almost certain to offer so little in interest that it makes sense to open, or add to, a deposit account at an online bank. Although a yield of about 1 percent may not seem like much, you'll have instant access to the money -- without fees and with Federal Deposit Insurance Corp. protection. If six-month or one-year CD rates begin to outpace what the online savings account pays, you can put some money into short-term CDs every three or six months.

-- Three to five years. Many people take out CDs to make sure they'll have cash at a specified time -- say, when it's time to pay tuition. Although we don't know what interest rates will be in 2017 and beyond, we see no profit in locking in a CD yield today. As long as the Federal Reserve restrains the cost of credit, you can comfortably house the money in a short-term, low-risk, low-cost bond fund. We like Vanguard Short-Term Investment-Grade (symbol VFSTX, current yield 1.6 percent) and Baird Aggregate Bond (BAGSX, 2.9 percent). You maintain overnight access to the money (so it still counts as savings), and you should be able to realize a total return of 3 percent to 5 percent.

-- Longer than five years. If you already have cash in the bank or some other supersafe place, we suggest you move part or most of the CD proceeds into exchange-traded funds or stock or balanced funds that pay 2 percent to 4 percent in interest or dividends. You can reinvest the investment income as you receive it, a plan that lets you buy some fund shares when they are cheap and others when they are not so cheap. All the while, watch those bank rates. If you get a chance to buy a CD that yields more than, say, a fund that follows Standard & Poor's 500-stock index (currently about 2 percent), you may want to go back to the bank, especially if you have other money, such as an IRA, in the stock market.

(Jeffrey R. Kosnett is a senior editor at Kiplinger's Personal Finance magazine. Send your questions and comments to moneypower@kiplinger.com. And for more on this and similar money topics, visit http://www.Kiplinger.com.)

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