If most of your savings are in a high-yield savings account or (even worse) under your mattress...you're not preserving your hard earned cash...you're losing it.

Consider this...

The current yield on an ING Direct savings account is 1.98%. The long-term inflation rate in the United States is just north of 2%. That means, every year (at this rate) you are losing 0.02% of your purchasing power. And that's BEFORE taxes.

Assuming a 35% interest income tax rate, your effective after-tax yield on that ING Direct savings account is 1.29%, which means your losing about $0.71 per year on every $100 you put in that savings account.

There are alternatives, but before I mention them...keep this is mind: 

There is no such thing as free money. Any profit requires SOME amount of risk

Now, I work with stocks on a day to day basis, and I'm not advocating it to those that are at all risk averse. No one knows where the hell the market is going these days - even if stocks are generally a good long-term investment.

However, you can effectively save without taking excessive risk.

Municpal Bonds are typically unpopular investment vehicles in normal economic times because

A) people don't understand what they are

B) people don't make money selling them to you

and C) they seem relatively unsexy

Basically, when you buy a "muni" you are assuming the debt obligations of the state or city that is offering that debt. They use your money for public services, utilities, infrastructure building etc etc.

What is the risk? That city or state goes bankrupt and is unable to pay its obligations.

How often has that happened? Wel...besides California, no muni has come close in this current economic crisis (I believe). And even California's IOU's are being backed by private institutions.

So...taking the New York muni for example, NYF is a municipal bond ETF. It is currently yielding 4% or so. But here's the kicker. Muni bonds CAN be triple-tax-advantaged, meaning exempt from taxation at the city-state-federal level.

SOOO, to find a 4% after-tax yield, you would need to find an investment or savings account that yields somewhere around 7%...good luck.

For all you people stuffing your mattresses with cash...I think the statistical probability of your house getting burglarized is greater than the chance of a major municipality going bankrupt.

SOOOOO...if you are relatively risk averse, but are looking to NOT lose money to the gods of inflation and taxation...look into muni bonds....there's my RL tip of the week.