One of the most important characteristics of personal investments is the real rate of return (i.e., the nominal rate of return adjusted for inflation)

In the December 28, 2009 New York Times article "At Tiny Rates, Saving Money Costs Investors," Stephanie Strom reports that savers lose purchasing power when the inflation rate exceeds the nominal rate of return. Thus, one of the most important characteristics of personal investments is the real rate of return (i.e., the nominal rate of return adjusted for inflation).

Millions of Americans are paying a high price for a safe place to put their money: extremely low interest rates on savings accounts and certificates of deposit.

The elderly and others on fixed incomes have been especially hard hit. Many have seen returns on savings, C.D.'s and government bonds drop to niggling amounts recently, often costing them money once inflation, fees and taxes are considered.

"Open a Savings Plus Account today and get a great rate," read an advertisement in the Dec. 16 Newsday for Citibank, which was then offering 1.2 percent for an account. (As low as it was, the offer was good only for accounts of $25,000 and up.)

"They're advertising it in the papers as if they're actually proud of that," said Steven Weisman, a title insurance consultant in New York. "It's a joke."

The advertised rate for the Savings Plus account has expired, according to the bank's Web site; as of Friday, the account paid an interest rate of 0.5 percent. The bank's highest-yield savings account, the Ultimate, was paying 1.01 percent.

The best deal Mr. Weisman has found is 2 percent on a one-year certificate of deposit offered by ING Direct, an online bank that has become a bit of a darling among the fixed-income crowd.

Interest on one- and two-year Treasury notes was just 0.40 percent and 0.89 percent, as of Monday. Bank of America offers 0.35 percent on a standard money market account with $10,000 to $25,000, and Wells Fargo will pay 0.05 percent on a basic savings account.

Indeed, after fees are subtracted, inflation is accounted for and taxes are paid, many investors in C.D.'s, government bonds and savings and money market accounts are losing money. In fact, Northern Trust waived some $8 million in fees on money market accounts because they would have wiped out all interest, and then some.

"The unemployment situation and the general downturn in the economy had an impact, but what's going to happen now as C.D.'s mature is that retirees and the elderly are going to take anywhere from a half to three-quarters of a percent cut in their incomes," said Joe Parks, a retired accountant in Houston on the advisory board of Better Investing, an organization that works to help people become savvier investors. "It's a real problem."

Experts say risk-averse investors are effectively financing a second bailout of financial institutions, many of which have also raised fees and interest rates on credit cards.

"What the average citizen doesn't explicitly understand is that a significant part of the government's plan to repair the financial system and the economy is to pay savers nothing and allow damaged financial institutions to earn a nice, guaranteed spread," said William H. Gross, co-chief investment officer of the Pacific Investment Management Company, or Pimco. "It's capitalism, I guess, but it's not to be applauded."

Mr. Gross said he read his monthly portfolio statement twice because he could not believe that the line "Yield on cash" was 0.01 percent. At that rate, he said, it would take him 6,932 years to double his money.

Many think the Federal Reserve is fueling a stock market bubble by keeping rates so low that investors decide to bet on stocks instead. Mr. Parks of Better Investing moved more money into the stock market early this year, when C.D.'s he held began maturing and he could not nearly recover the income they had generated by rolling them over.

He began investing some of the money in blue chip stocks with a dividend yield of at least 3 percent and even managed to find an oil-and-gas limited partnership that offered 8 percent.

Mr. Parks said, however, that he would not pursue that strategy as more of his C.D.'s matured. "What worked in the first quarter of this year isn't as relevant, because the market has come up so much," he said.

No one is advising a venture into higher-risk investments. Katie Nixon, chief investment officer for the northeast region at Northern Trust, said that, in general, "no one should be taking risks with their pillow money."

"What people are paying for is safety and security," she said, "and that's probably just right."

People who rely on income from such investments for support, however, are being forced to consider new options.

Eileen Lurie, 75, is taking out a reverse mortgage to help offset the decline in returns on her investments tied to interest rates. Reverse mortgages have a checkered reputation, but Ms. Lurie said her bank was going out of its way to explain the product to her.

"These banks don't want to be held responsible for thousands of seniors standing in bread lines," she said.

Such mortgages allow people who are 62 and older to convert equity in their homes into cash tax-free and without any impact on Social Security or Medicare payments. The loans are repaid after death.

"If your assets aren't appreciating and aren't producing any income, you're getting eaten up in this interest rate environment," said Peter Strauss, a lawyer who advises the elderly. "A reverse mortgage is one way of making a very large asset produce income."

Eve Wilmore, 93, has watched returns on her C.D.'s drop to between 1 percent and 2 percent from about 5 percent a year or so ago. Yet the Social Security Administration recently raised her Medicare Part B premium based on those higher rates she had been earning. "I'm being hit from both sides," Mrs. Wilmore said. "There's some way I can apply for a reconsideration, and I'm going to fight it. I have to."

She said she was reluctant to redeploy her money into higher-risk investments. "I don't know what my medical bills will be from here on in, and so I want to keep the money where I can get to it easily if I need it," she said.

Peter Gomori, who taught a course on money and investing for Dorot, a nonprofit that offers services for the elderly, did not advise his students on investment strategies but said that if he had, he would probably have told them to sit tight.

"I know interest rates are very low for Treasury securities and bank products, but that isn't going to be forever," he said.

But investment professionals doubt rates will rise any time soon — or to any level close to those before the crash.

"What the futures market is telling me," Mr. Gross said, "is that in April 2011, these savers that are currently earning nothing will be earning 1.25 percent."