Certificates of deposit have long been the hiding place for money you absolutely can t afford to lose the house down payment or next year s tuition. But lately, CD investing has seemed only a hair more profitable than sticking cash under a mattress, with the average one-year CD paying only 1.75 percent. Small wonder that financial-service companies have seen a niche for structured CDs, which offer the possibility of double-digit returns. Investors face more risk, explains Frederick Wright, a financial planner at Smith & Howard Wealth Management, but they can t lose their principal; as with all CDs, it s insured by the federal government, up to $250,000.

Structured CDs come in many varieties, but the basic idea is that the returns are linked to the performance of some other kind of asset. Sonny Davis, an Atlanta business owner, bought a three-year CD pegged to the value of the dollar. The CD will make money if the dollar loses value against a group of emerging-market currencies if the dollar s value drops by 20 percent over that span, for example, Davis will earn 20 percent plus a premium, giving him a return of more than 8 percent annually. Then again, if the dollar strengthens, Davis gets his principal back but doesn t earn a dime. Another structured product, the inflation-linked CD, is gaining popularity as a hedge against rising prices. Mark Del Pezzo, director of portfolio management for Camarda Financial Advisors in Fleming Island, Fla., recently put clients in a Wells Fargo CD that pays 3.25 percent through June 2012 and then resets every three months, paying 1.4 percent above the inflation rate.

All these CDs can be tricky to understand even for the pros, and the fine print can be onerous. The products often cap investors returns, so if the stock market goes on a tear, a stock-linked CD might pay only 60 percent of the gains. And investors accustomed to getting some small amount of interest from a CD are often surprised to find that their gains from a structured one can be, well, zero. There are, of course, other options: Buying a five-year CD can net an investor closer to 3 percent a year, and there are also callable CDs, which pay slightly higher rates but give the bank the option of recalling the CD and returning investors money if rates drop lower. To get 5 percent from a callable CD, you d have to agree to lock up your cash for drum roll, please 20 years. Many financial planners think that s too long to wait for a payoff that small.

CDs With Potential

Inflation-Indexed: Wells Fargo Five-Year CD (Yield: Inflation + 1.4%)
Pays 3.25 percent until June 2012, at which point it resets to 1.4 percent above the Consumer Price Index. If inflation rises to the levels it did briefly last year or in the late 1980s, investors could earn 5 percent or more.

Stock-Indexed: Harris Bank Five-Year CD (Yield: S&P 500 returns, capped at up to 20% annually)
Pays the sum of each year s S&P 500 returns. Investors don t get dividends, however; if the market goes down, they get their principal back (and nothing else).

Currency-Indexed: Wells Fargo Three-Year CD (Yield: varies widely)
Tracks currencies of Brazil, Russia, India and China, which many analysts expect to strengthen in the long term; after three years it pays whatever they ve gained against the dollar, plus 30 percent. If the buck rises instead, investors get nothing.

Also See:

• Boost Your Returns: Bonds
• Boost Your Returns: Dividends