With interest rates going up, and the chances that the Fed will raise again next week increasing (though far from certain), it is no surprise that cash is becoming a better investment. It will never yield as much as a good stock portfolio (although cash is beating the returns on some individual stocks), but it is a safer mode of investment. And there are few cash investments generating more annual percentage yield than CDs right now. CDs are doing better than most money market accounts, and are beating out online savings accounts in terms of APY. So, even if the Fed does not raise rates again in the immediate future, the fact of the matter is that you can give a little boost to your rainy day savings with a little help from CDs. And, with rates as they are, now is a good time to lock in with a good start on CD Laddering.
One of the benefits of CDs is their liquidity. They ensure that you have a ready supply of cash within a short period of time. While you cannot withdraw them before the term is up without incurring heavy penalties, you can get them in a variety of term-lengths, from six months to years and years down the road. It is also possible, in some cases, to puchase three month CDs, though these are harder to find and are often a secondary market. If you are looking for rainy day savings, you can stagger your CD investments so that they mature every six months. This is less beneficial than regular CD laddering, with CDs maturing once a year, but you have the peace of mind in knowing that you can get to your money every six months.
Investing in cash is one of the safer ways to go. While it cannot replace having other investments for long term financial and retirement planning, it can give you some short term peace of mind, and give you a relatively safe investment to fall back on in tough times.