What the experts say

Options that beat the bank

“Saving has never been less rewarding,” said Jen Wieczner in SmartMoney.com. Americans are saving about 4 percent of their disposable income, double the rate from 2007, but the average savings account yields just 0.08 percent, meaning that $10,000 in deposits earns “a measly $8” in a year. With returns so low, savers should look for other avenues for their cash. Investing in index funds makes sense right now, since the Fed’s latest round of quantitative easing is expected to lift the market. You could also put your cash toward a new car; auto loan interest rates fell to record lows in August, with a 60-month loan averaging 4.4 percent, compared with 7.7 percent five years ago. Savers may also look for online savings accounts, which can pay higher interest rates since they don’t have the overhead costs of brick-and-mortar banks. American Express Bank, for instance, is currently offering a 0.9 percent yield on savings accounts.

New threats for small investors

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New rules designed to help small businesses raise funds could pose a trap for ordinary investors, said Karen Blumenthal in The Wall Street Journal. This year’s JOBS Act allows start-ups like “your neighborhood gelato shop” to seek up to $1 million in investments through crowdfunding. The law also allows investment vehicles like hedge funds to advertise to the general public, whereas before they could only market themselves to wealthy investors. The changes offer opportunities to ordinary joes, but they could also “unleash an explosion in investment scams.” Regulators say potential investors should scrutinize the advertised yields, and make sure they understand any fees. And remember: “You shouldn’t invest money in a private offering or start-up unless you can afford to lose it all.”

A prudent path for munis

If you’re invested in the municipal bond market, said Carolyn Bigda in CNNMoney.com, it may be time to reassess. Investors have been piling into the sector, chasing fat yields that aren’t on offer elsewhere. But that means selecting quality bonds is more important than ever. Though junk munis “can be good deals when the price is right,” that time is not now. Demand has pushed average yields down to 5.9 percent, from 7 percent a year ago, “even as default risks grow.” Better to stick with munis with credit ratings of AA or higher. They are “easy to trade, carry lower risk, and still offer relatively attractive yields.”