Here are some thoughts to keep in mind as you create a plan for your "cash investments."

• Liquidity and activity levels usually influence the dividend rates offered on different types of cash accounts.
• Liquidity means how quickly you can access your funds.
• Activity means how often you can use the account.
• Generally, accounts that allow more liquidity and more activity pay lower dividend rates.

For example, a checking account, which provides convenient access to your money, will usually pay lower dividend rates than a savings account that limits the number of monthly transactions. With share certificates, you commit your funds for a certain term and earn higher dividend rates. Share Certificate terms typically range from five months to five years with the longest maturity share certificate usually paying the highest rate. However, share certificates don't allow for early access without a dividend penalty.

Here is a typical chart of dividend rates for different types of accounts.

Account Type	APY*	Minimum
Checking	0.0%	$0
Savings	0.85%	$5
5 month Share Cert.	1.35%	$1,000
7 month Share Cert.	1.35%	$1,000
1 year Share Cert.	1.75%	$1,000
3 year Share Cert.	2.65%	$1,000
5 year Share Cert.	3.55%	$1,000
Rates are effective June 1, 2003 and are subject to change.

Choosing the best account, or combination of accounts, depends on how you use your cash. You may want to consider a strategy that combines two or three accounts for your particular cash needs. To illustrate, let's say you have a total of $10,000. A checking account that you use for regular monthly expenses has a balance of $4,000. Your savings account, which you use to save for major expenses (i.e., vacation, new car, down payment on a house), or for unexpected expenses, has a balance of $6,000.

Using the example above, with $4,000 in your checking account and $6,000 in your savings account, you will earn total annual dividends of $51.

Account	Average Balance	APY*	Dividends Earned
Checking	$4,000	0.0%	$0
Savings	$6,000	0.85%	$51
Total	$10,000		$51
Rates are effective June 1, 2003 and are subject to change.

But look what happens if you distribute your funds differently. Let's assume you can reduce your average checking balance by $1,000 and then use your savings account more as an emergency source of funds than as a longer-term accumulation account. The following example uses share certificates of 5-month, 7-month and 1-year terms to earn higher rates, yet still provides liquidity for emergencies and to make that major purchase at the end of the year.

Account	Average Balance	APY*	Dividends Earned
Checking	$3,000	0.0%	$0.00
Savings	$1,000	0.85%	$8.50
5 month Share Cert.	$1,000	1.35%	$13.50
7 month Share Cert.	$2,000	1.35%	$27.00
1 year Share Cert.	$3,000	1.75%	$52.50
Total	$10,000		$101.50
Rates are effective June 1, 2003 and are subject to change.

Rearranging your cash into accounts that more effectively reflect your liquidity needs will earn you an extra $50.50 in a year.

Of course you have to pay attention to the features of the accounts you choose for your cash investments. However, by taking into consideration how you use your money, you can improve the returns and possibly make that major purpose a little sooner.

Useful Links
Savings/Checking Account Rates
Share Certificate Rates

*APY refers to Annul Percentage Yield