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Q: My wife and I have a CD ($300,000) maturing this summer.

We also have $150,000 in a bank money-market savings account.

Both are earning very low interest rates. The CD is earning at 0.8 percent and the money-market savings are earning 0.03 percent to 0.05 percent.

Worse, both are subject to IRS reported income.

We are quite conservative and do not really depend on the income of these accounts, but we would like to see a much better return with low risk.

Can you please suggest how these funds should be invested?

A: There really aren’t any options that don’t expose you to significant risk of loss if interest rates rise.

So far this year, for instance, the Vanguard Total Bond Market ETF has lost 3.61 percent, most of it in the last month.

The year-to-date return on inflation-protected securities has been worse — the popular iShares Treasury Inflation-Protected exchange-traded fund has lost 8.23 percent.

The best you can do is search for the best offers on short-term certificates of deposit from banks and, more likely, credit unions.

Some CD-like tax-deferred annuities offer higher yields, but they generally require commitments of three years or longer.

They also don’t carry a government guarantee. If interest rates continue on their upward trend, the last thing you want to do is stretch maturity to get a higher yield.

Q: My wife and I are both retired teachers with pensions totaling $5,000 monthly.

We own our home free and clear, as well as my 2006 Toyota RAV. We have two (60-month) jumbo CD-IRAs (nontaxable) earning 4.07 percent that will mature in October.

I am 59 and my wife will turn 59 in October.

Other than a car payment of $330 monthly for 48 remaining months and about $2,000 in credit-card debt, we have no debt.

We would like to move some of these funds to a better yield product.

A: You can do a rollover or transfer from one IRA custodian to another with no tax consequences — and the new custodian will help you do it.

They will do it directly, from custodian to custodian, so there will be no question of having had “constructive receipt” of the money.

It is important for you to understand that moving from an FDIC-insured certificate of deposit to a mutual fund like Vanguard Balanced Index means you will be improving the yield of your investment while accepting risk of loss.

According to the Morningstar website, VBINX (the ticker for Vanguard Balanced Index) has a current yield of 1.59 percent.

While this fund has had a five-year annualized return of 6.37 percent, a return that put it in the top 12 percent of all balanced funds, it suffered a loss of 22.21 percent in 2008. You should also know that its 2008 loss was a better performance than the 87 percent of its managed competition that lost more.

If you are healthy and have enough income to meet your needs today, you should consider delaying taking your Social Security benefits until your full retirement age or later, since they will grow about 8 percent (plus inflation) for every year of delay.


Copyright, 2013, Universal Press Syndicate