Best certificate of deposit

PUNY INTEREST RATES MIGHT BE GREAT FOR borrowers, but they're not good for fixed-income investors. Years of skimpy rates have made life hard for those who rely on interest-bearing investments to fund their retirements or their kids' educations.

Investors with long-term CDs coming due may be in the trickiest situation of all A five-year CD locked in during the summer of 1999, for example, has been paying considerably more in interest than a comparable investment bought today will yield. So what's an investor to do with the money once that CD rolls over?

The question has become perennial for investors who ladder their CD portfolios. In this scenario, you might have $10,000 apiece in five five-year CDs. They're staggered so that one comes due annually, and you invest the proceeds in another five-year CD. Investors in this boat have been buying low for several years now, and doing so again might not sound like fun.

Despite the pain, the simplest advice for laddered-CD investors is still the best. In short, stick with the plan.

But for CD investors who don't have a ladder in place, now probably isn't the time to build one. So what to do?

One option is a bump-up CD, which gives you a chance to boost the rate if interest rates rise during the investment time frame. You can also buy jumbo CDs or callable CDs. The latter gives the bank the right to call them in if rates fall and pays you an extra quarter to a half of a percentage point for the right.

But the best advice when rates are low and the future is uncertain is to stay" short. Keep your money in short-term instruments, and hope that by the time it rolls over, rates will be on the rise.

SCOTT BERNARD NELSON is deputy business editor at The Oregonian and a freelance writer in Portland, Oregon.