Q. I now hear all the time about cash investments. What exactly are these? – O.T., via the Internet

A. Cash investments are short-term instruments that don’t lose value and can be quickly redeemed.

Although their interest-rate yield is low and also temporary, they gain in popularity during periods when other investments have been tumbling in value. Every portfolio should have some cash investments to cope with emergencies.

“People are getting more concerned about the return of their money than the return on their money,” said Marilyn Capelli Dimitroff, certified financial planner and president of Capelli Financial Services Inc. in Bloomfield Hills, Mich. “Cash investments offer the ultimate safety and liquidity.”

Among the cash choices offering immediate access to your money are money-market funds, bank money-market accounts and checking accounts. Bank certificates of deposit have penalties for early withdrawal but pay higher rates, while U.S. Treasury bills are a low-cost government investment vehicle that matures in three, six or 12 months.

“Remember that if you sell Treasuries prior to their maturity there is no guarantee that you’ll get your full principal back,” Capelli Dimitroff said. “Anything that is marketable -- meaning it can be sold to someone else -- can fluctuate in value.”

Q. I am retired and own my home. My savings have taken a beating, and my son suggested a reverse mortgage. How do they work? – M.I., via the Internet

A. Although many issuers of reverse mortgages have decided to pull back until the economy improves, one type being offered is the Home Equity Conversion Mortgage, insured by the Federal Housing Administration and available to homeowners over 62.

The lender makes a payment or payments to the borrowing homeowner, who keeps control of the house and doesn’t have to pay the loan back as long as he or she lives there. The homeowner still must pay property taxes, homeowner’s insurance and make property repairs.

When the loan is over, the homeowner or heirs must repay the cash advances, plus interest.

“The housing crisis has generated more interest in reverse mortgages because people find themselves cash constrained or their investments aren’t paying what they once were,” said Peter Bell, president of the non-profit National Reverse Mortgage Lenders Association in Washington, D.C.

A rough rule of thumb is that the percentage of the value of the home available to you is roughly your age minus 10, said Bell, so that those 75 years old would have 65 percent of the home’s value available to them. The government’s economic stimulus plan has increased the maximum to $625,500, from $417,000, starting this year.

Q. I am 62 years old, retired and drawing from a traditional IRA. In converting some of my current traditional IRA to a Roth IRA, would I still come under the five-year waiting period? – J.S., via the Internet

A. The five-year waiting period applies. To take a qualified distribution, you must be 59 1/2 and must have waited five years from the time of your initial contribution or the time of conversion. If you take a distribution before the waiting period is up, you pay a 10 percent penalty.

A Roth conversion basically takes money treated as tax-deferred and converts it into a Roth account that allows tax-free withdrawals. To make the conversion, you must pay tax on the amount you convert.

“It sounds like you want to do a series of conversions, which a lot of people do,” said Molly Balunek, certified financial planner with Spero-Smith Investment Advisers in Cleveland. “Every year, they convert an amount that doesn’t push them into the next tax bracket.”

While a full conversion to a Roth IRA is common, a partial conversion may also make sense if you don’t have enough cash outside your retirement account to pay the tax on a full conversion.

Q. What’s the difference between the dividend yield and the dividend payout ratio? How are they calculated and which is more important? – H.K., via the Internet

A. They serve different functions.

Dividend yield indicates how much a firm pays out in dividends each year relative to its share price. It shows how much cash you are receiving from your investment.

It is calculated by dividing the annual dividend per share by the share price. A company paying an annual dividend of $1 per share whose stock is trading at $20 has a dividend yield of 5 percent.

Meanwhile, the payout ratio indicates how much of the company’s earnings it makes in a year are paid out in dividends. This shows how well its earnings support the dividend payments.

It is calculated by dividing the annual dividend per share by the earnings per share. For example, the payout ratio of Chevron is 22 percent, PepsiCo 46 percent and Duke Energy 88 percent. Utilities are dividend-oriented and typically have high payout ratios.

“If a company has a high payout ratio and earnings fall off, it might have to cut its dividend,” said James Paulsen, chief investment officer with Wells Capital Management in Minneapolis. “But companies with a low payout ratio could take an earnings hit without having to lower their dividend.”