Some conservative advice on cash

Q: I have income from real estate totaling approximately $95,000 per year and $300,000 in short-term CDs earning 4.18 percent. What can I do with some of my cash that is safe, guarantees my principal, and has higher returns?
J.K., via e-mail

A: You might consider fixed annuities. Or, says Bryan Beatty, a certified financial planner in Vienna, Va., how about a mixture of government (both federal and municipal) bonds?

Both options guarantee principal, as long as you allow them to operate until they mature. And it doesn't get much safer than government bonds.

Q: I have only one credit card that I pay off in full every month. Over the years, the credit-card company has increased my available credit. It is far above what I would ever need since I have a money-market account that I can tap in an emergency. Should I ask the company to reduce the available credit on my card?
I.H., Brevard, N.C.

A: It's a decent idea to trim that credit line, says John R. Erb, a certified financial planner in Alexandria, Va. He believes that under most circumstances it's best to carry only as much available credit as you need. If your credit limit increases to levels that you would struggle to repay - even if you never borrow that amount - it can have a negative impact on your credit score.

It's not as if you're using this excessive line of credit to build a credit history. And besides, Mr. Erb says, you can tap your money-market should you need funds quickly. If you happen to reduce your credit limit below what you might occasionally need, you usually can call the credit-card company and request a single "over the credit limit" transaction.

As an alternative, you might consider opening a home equity line of credit (at virtually no cost) for a backup source of funds for emergencies or unexpectedly large purchases.

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