Lots of liquid investment vehicles are offering 3% now, so is there any reason to invest in longer duration? We are in a "conundrum," so we should be more careful.

"With that late June Fed hike, if it does come, the very largest retail money funds - Fidelity Cash Reserves, Vanguard Prime - that will push them to 3 percent," Mr. Crane predicted. At that point, money funds would be competitive with ING Direct's Orange savings account, which he called the market bellwether, now at 3 percent, and with EmigrantDirect.com's AmericanDream savings account, now paying 3.25 percent.

Tax-free money funds are especially attractive now, Mr. Crane added, with the most generous of them returning more than 4¼ percent on a taxable-equivalent basis to a top-bracket taxpayer. Yields have "remained just tantalizingly high," he said, even for middle-bracket taxpayers. "I can't understand why they haven't been knocked down," he said.

Another vehicle for those who hunger for more yield on cash reserves is ultrashort bond funds - and on June 1, Fidelity Investments made its version less costly. In fact, it cut the expense ratio of all 12 of its taxable, investment-grade bond funds to 0.45 percent from a range of 0.50 to 0.65 percent.