by Liisa Sullivan

In times of economic tumult, most people hit the panic button. But there’s a special level of alarm reserved for the time when everyone decides exactly what to do with their money. Divvy it up into banks and hope none of them fail? Convert it to gold and bury it in the backyard? We asked a few Asheville financial counselors to help us calm down and protect our (probably dwindling) assets.

First things first, do not withdraw your money from the bank and sew it up in a mattress. Sounds silly, right? It isn’t. Suzanne DeFerie, president and CEO of Asheville Savings Bank, says she spent several days in late 2008 trying to reassure jittery customers, some of whom had lived through Great Depression-era bank runs, that it would be unsafe and unwise for them to withdraw all their cash and take it home with them.

Once you’ve established that your money should stay in the bank, look for accounts that are insured by the FDIC, says Dawn Starks, a certified financial planner at Starks Financial Group, Inc. In October 2008, the good old FDIC, or Federal Deposit Insurance Corporation (which has been keeping people’s money safe since 1933), temporarily raised the amount it will insure from $100,000 per person to $250,000 per person. The temporary increase applies through 2009 and is set to return to $100,000 starting in 2010.

If you have $250,000 or less, one of the absolute safest places to stash it, says Starks, is a money market deposit account, a type of bank account. This is not to be confused with a money market fund, which is a type of mutual fund. Money market deposit accounts, available at most banks, are very “liquid,” Starks notes, making them easy to access through checks and transfers. If you want your stashed cash to earn some money while it sits around, the downside to a money market is that it offers a very low rate of return.

For a slightly higher return rate, but an equally safe FDIC-insured place to park cash, go with CDs—certificates of deposit. Barbara Gray, a certified financial planner at Parsec Financial, explains that CDs are not quite as accessible as money markets, but they’re likely to offer a slightly better payoff in the end, depending on how long it takes them to mature.

After the panic passes and you’re looking for longer-term, but safe, investments, Susan McGrath, a certified financial planner at Asheville’s Holcombe & McGrath, Inc., says municipal bonds and corporate bonds can be good bets. As usual, the key to smart, long-range investing is diversification. Starks adds that another cardinal investing rule—if a client can stomach it in such uneasy times—is to “buy and hold.” In other words, much as you might want to grab your money and flee at the first sign of portfolio shrinkage, if you have the fortitude to sit back and relax for a few years, you’re likely to not only recover your investment but also earn yourself a bit of a cushion.