Under the mattress, in the cookie jar, or buried in the backyard were common hiding places for cash in less sophisticated times.

Today, the sophistication level is higher, but the fear of losing money is every bit as real.

Cash investments, also known as cash equivalents, have been ready receptacles for billions of dollars that worried investors have pulled out of volatile stocks, bonds, and mutual funds.

These liquid or relatively liquid obligations that provide a return in the form of interest payments include short-term certificates of deposit, money-market accounts, money-market funds, short-term bond funds, and U.S. Treasuries.

Currently, the most popular cash choices of financial planners and market strategists are risk-free bank CDs and money-market accounts. They not only benefit from competitive yields, but the government has increased the amount insured by Federal Deposit Insurance Corp. to $250,000 per person per institution and $500,000 for joint accounts.

Cash vehicles have been the trusty portion of portfolios that hold a lot of stocks and bonds. They're used to store family emergency funds as well. Though rates of return are eroding from recent interest-rate reductions, their starring role isn't ending anytime soon.

"I would not buy Treasuries now, as I believe they're mispriced," says Adam Bold, chief investment officer of the Mutual Fund Store advisory and asset management firm, in Overland Park, Kan. "In the flight to safety that has occurred, extraordinary demand for Treasuries has impacted negatively on yield."

Higher yields than Treasuries are available on FDIC-insured bank money-market accounts offering the same guarantee as Treasuries, says Bold, who doesn't like tying money up in a CD because comparable yields are available with no strings attached.

For investors who have moved assets to cash, the question is when they'll move back into the stock market, Bold says. He considers it a mistake to have all assets in cash because "the market will rebound, and when it occurs, it will be dramatic."

"Institutional investors are stampeding into Treasuries, but their returns are low," says Greg McBride, senior financial analyst with Bankrate.com, in North Palm Beach, Fla. "As an individual investor, you can have the same risk-free return but receive a higher yield."

If you actively seek the best returns, you can get 4 percent or better on everything from six-month CDs to five-year CDs, he says. Even some money-market accounts and savings accounts have yields close to that, he says.

"The most viable cash alternatives right now are short-term certificates of deposit, Treasuries, and money-market funds," says Charles Zhang, certified financial planner with Zhang Financial, in Portage, Mich. "If someone does not need to use their money in the short term, CDs are the most attractive option because they are FDIC-insured up to $250,000, offered at any bank, and yield competitive interest rates."

Zhang expects low inflation and low interest rates over the next several years. Although many consider it less risky to liquidate their investments and hold cash when the market is troubled, Zhang says such a market represents the best time for a long-term investor to invest in bargain-price stocks.

"If you go for super-safe investments like passbook savings and Treasury money markets, they'll give you peace of mind but produce a low return that won't keep up with inflation," says Russel Kinnel, director of mutual fund research for Morningstar Inc. in Chicago. "It's a good time to have cash primarily because you can put it to work, with stocks and bonds at fire sale prices."

Some—but not all—short-term bond funds offer opportunities, he says.

The $9 billion Vanguard Short-Term Bond Index (VBISX), with one-year total return of just over 3 percent and three-year annualized return of about 4.5 percent, offers broad exposure to U.S. investment-grade bonds and has no mortgage exposure.

That "no-load" (no sales charge) fund has a low 0.18 percent annual expense ratio and requires a $3,000 minimum initial investment. It invests in higher-quality bonds than many peers, with three-quarters of its portfolio at AAA rating. Average maturity of the bonds it holds is less than three years.

Just remember that with bond funds you're stepping outside the realm of "risk-free" because the bond market has not been a place to hide lately, McBride says. That's not to say it is an inappropriate investment, but he believes it has to be viewed in the proper context.

Some say having a majority of your money in cash should be temporary at best.

"Historically, once the magnitude of a decline in a bear market gets down to 45 or 50 percent, the bear market generally is put to bed," says Steven Goldman, chief market strategist with Weeden & Co., in Greenwich, Conn. "Since we've been at those compelling levels, the only question is whether this backup is different than the ones we've seen before."

He's counting on the stock market to make a comeback.

"This is the time to start sharpening your pencil, asking if we're going to get out of the recession six, seven, or eight months from now," says Goldman, who considers current stock prices extremely attractive. "By the end of next year you'd think the economy will start to improve and, if so, you'll have had some nice dollar-cost averaging."