The RBA paper Households' Appetite for Financial Risk says that between 2008 and last year, a net $67 billion was taken out of the sharemarket.

During that time, bank deposits increased by about $225 billion - $90 billion more than the increase in the previous three years.

The share of households' financial assets held directly in equities has more than halved, from 18 per cent before the global financial crisis to 8 per cent at the end of last year, the report says.

In contrast, the share of deposits has risen from 18 per cent to 27 per cent. But financial advisers say term deposits carry their own risks.

The principal of Multiforte Financial Services, Kate McCallum, says the first of these relates to liquidity - the fact that your money is locked up.

''You can always break the deal, of course, but the fees and charges can be onerous,'' McCallum says.

Then there's a rollover risk.

If you don't intervene, term deposits can automatically roll over to much less favourable rates when they mature, she says. Even if you stay on top of a maturing term deposit, there's the risk that you'll have to roll over to a lower rate anyway because market rates have fallen, as they have since late last year, McCallum says.

The director of YBR Funds Management, Christopher Joye, says that's not to say people should avoid term deposits, but they should be part of a ''holistic'' approach for short-term savings and investment goals.

Other ''cash-like'' instruments people could consider include cash management accounts, cash management trusts and ''cash-enhanced'' or short-term fixed-interest funds, Joye says.

Along with YBR's Smarter Money, he points to the Macquarie Treasury Fund, DFA's Short Term Fixed Interest Trust, Ord Minnett's Cash Management Trust and BT's Enhanced Cash Fund. ''These are all ways of getting access to a well-diversified portfolio of bank bonds and bank deposits,'' he says.

YBR's Smarter Money, for example, invests mainly in institutional-grade bank deposits, term deposits and bonds issued by banks and has made an annualised return of 6.25 per cent to 6.65 per cent after all fees, including its performance fee, since its inception on February 17.

A portfolio manager with Altius Asset Management, Chris Dickman, says the way to take advantage of falling interest rates is by owning longer-dated bonds.

But Australians have less than 10 per cent of their assets in the bond market, which is low by world standards, Dickman says.

In Britain, it's closer to 30 per cent and, despite the economic woes there, ''it's still the case that because of their greater weighting towards bonds, investors over there have done remarkably better than those in Australia''.

He says that while bonds should be part of a balanced portfolio, if all you held last financial year was long-dated bonds, you would have had a return approaching 20 per cent.

Some people look at bond yields and aren't excited by what they see, Dickman says. ''But they should be excited about the returns should conditions be favourable to falling interest rates. Yield is just the starting point.''

Bonds are tradeable instruments and rising bond prices bring the potential for capital gains, he says. Dickman gives the example of a 10-year bond with a coupon of 5.75 per cent that, at the start of March, was yielding 4 per cent. By the end of May, the yield was 3 per cent.

Bond yields fall as their prices rise (yield is calculated by dividing the amount of interest a bond will pay during a year by the price), so in this case the result for the investor was a return of about 9 per cent during that period because of the capital gain.