People generally know they are taking some risks when they buy stocks, corporate bonds and mutual funds. But during the financial stresses of the last few weeks, they've discovered that even seemingly safe havens became quite unpredictable.

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You can’t afford to make no-brainer decisions with money now, especially with the money you intend to keep completely safe.

People generally know they are taking some risks when they buy stocks, corporate bonds and mutual funds. But during the financial stresses of the last few weeks, they’ve discovered that even seemingly safe havens became quite unpredictable.

With institutions such as Washington Mutual failing, for example, the Federal Deposit Insurance Corp. has been stepping in to make sure people receive money back when banks collapse. But people aren’t guaranteed to get everything they have had in banks. The FDIC has limits on the money they will return to people — $100,000 for an individual, $100,000 per person in joint accounts, and $250,000 in individual retirement accounts.

The explosive environment lately has made some financial advisers cautious about handling the cash their clients need to draw on for short-term needs — especially retirees, who are often advised to keep a year to two years of cash handy for living expenses. Money market funds have been a favorite short-term savings place because they often pay slightly higher interest rates than bank savings accounts or bank money market accounts.

Now that it’s clear that money market funds are less safe than once thought, Steve Weinstein, president of Altair Advisers in Chicago, is using funds that invest only in Treasurys.

In addition, rather than relying on only one money market fund, some clients are dividing their money into several to lessen the risk, Weinstein said.

Those using bank savings accounts and CDs are also making sure they don’t rely on a single institution.

Through a program called the Certificate of Deposit Account Registry Service, or CDARS, a person can have accounts larger than $100,000 and still receive FDIC protection. The person can deposit a large sum into a CDARS program at a bank, and then the program divides the money up into CDs at multiple institutions. For example, a person with $500,000 would have five CDs at five different banks, but have paperwork from a single source and full FDIC protection.

“It’s all about diversification,” Weinstein said.

Given the current state of the financial system, it’s difficult to anticipate risks, so spreading money into multiple accounts provides a level of protection. Besides his cautious approach with cash, Weinstein is being careful with bonds.

Typically, investors have considered many municipal bonds as almost as safe as U.S. Treasury bonds. That’s been especially true of general obligation bonds, or the bonds that states, cities and other governments pledge to pay with tax money, regardless of any stresses that might arise.

Currently, however, financial advisers are growing leery of municipal bonds too. With unemployment climbing and real estate values falling, cities and states are expected to have declining tax revenue. The National Conference of State Legislators says many states will be facing financial pressures in 2009. The group estimates a $40.3 billion shortage in revenue to cover costs. Governments will be making cuts in expenses, and some already have been tapping rainy-day funds.

To protect investors, some advisers are selecting only general obligation bonds from states rather than cities.

Bruce Heyman, managing director of Goldman Sachs Private Wealth Management, has been using high-quality escrowed to maturity prerefunded municipal bonds. With such bonds, the investor is protected because U.S. Treasurys are put aside to cover the payments.

For investors who want safety, “make sure they are escrowed,” Heyman said.

Of course, relatively safe municipal bonds — like U.S. Treasurys — are providing very little yield now. The municipal bonds Heyman likes may be yielding about 2.1 percent.

But Marilyn Cohen, president of Envision Capital Management in Los Angeles, warns investors to beware of seeking higher yields with money that must be safe.

“We are in the midst of a crisis, not the end,” Cohen said. “It’s ludicrous to seek more yield in the middle of a crisis.”