As the Federal Reserve continues to raise rates, your cash is getting a better return. But inflation is still nibbling away. Illustration by Mathieu Persan By Tom Petruno, Contributing Writer May 10, 2018From Kiplinger's Personal Finance Thanks to the Fed, cash is no longer trash. Yields on short-term fixed-income accounts and securities–typically meaning those maturing in one year or less–have tracked the Fed's key rate and now are mostly between 1% and 2%. And note: If the Fed sticks with its rate-hike plan, yields on bank savings deposits, money market funds, U.S. Treasury bills and other short-term accounts could be 1.25 points higher by the end of 2019 than they are today. Earnings for All 35 Ways to Earn Up to 11% on Your Money Short-Term Accounts: 1%-2% Muncipal Bonds: 2%-3% Investment-Grade Bonds: 3%-4% Foreign Bonds: 3%-5% High-Yield bonds: 3%-6% Dividend-Paying Stocks: 4%-6% Real-Estate Investment Trusts: 4%-9% Closed-End Funds: 4%-9% Master Limited Partnerships: 8%-11% The risks: There is little to no risk of principal loss on most short-term accounts. The main risk is inflation. The annualized U.S. inflation rate is about 2%, and until yields rise above that mark, cash in these accounts is losing purchasing power. Sponsored Content How to invest: One of the most popular short-term savings options is a money market deposit account at a bank. The average national yield is a mere 0.18%, but some banks recently paid as much as 1.8% on such accounts, says Greg McBride, chief financial analyst at Bankrate.com. So it pays to shop around. Federal deposit insurance is identical at every bank: It insures deposits up to $250,000 per depositor, per institution. If you're willing to lock up your cash for one year, you can find banks paying as much as 2.2% on one-year certificates of deposit. But McBride says most savers are smart to stay liquid in money market accounts: "In a rising-rate environment, you want the ability to reinvest on a regular basis" at higher yields. Advertisement Banks' chief rivals for short-term savings are money market mutual funds. The average money fund yield was recently 1.3%, but some are paying significantly more. We like Vanguard Prime Money Market (symbol VMMXX, yield 1.8%). Though not federally insured, money funds are low-risk. Finally, a super-safe option is U.S. Treasury bills. Six-month T-bills recently yielded 2%. You can buy them directly from Uncle Sam at www.treasurydirect.gov. Residents of high-income-tax states will appreciate that states don't tax U.S. Treasury interest income.