I am using Simple URLs plugin and never have any issue in serps.

You can make a new .php page and put this in it:

<?php
header("Location: http://www.example.com");
?>

It will redirect the visitor to desired URL, you can name the PHP file however you want. Never had problems with this.

Generally do a redirect using yoursite.com/affiliatelinkdescription - don't do a plugin that dynamically does it with ? marks.

I've used Pretty Links plugin with no problems. I would recommend that.

just make it no follow...I have several sites ranked #1 all links are no follow I never had any problem so far...

Any link masking plugin will do for hiding the link, but if a spider visits the link then it will know the destination source unless you cloak the link through spider detection. Nofollow will tell honest robots to not toy with the link, but robots who act as police for google will not honor nofollow, and thats when you may decide to cloak the link.

You can cloak through useragent detection and browser feature detection or by blocking a range of IP addresses, but there is no 100% safe way to cloak.

WP Traffic Tools offers the best in masking and medium security cloaking if it's something you are interested in doing.

The reason why I developed in cloaking is because people on the forums where saying new websites with high number of outbound links heading to the site amazon were sandboxed unless the number of outbound links to amazon was low compared to other non-amazon outbound links. I did not like that Google made such blind considerations at the cost of my investment dollar so I decided to prevent the problem by hiding the destination of my monetized links.

I rarely do this practice today but sometimes I do.

1 - make the link no follow
2 creat a new fils link.php
put this code on it

<?php
$link=$_GET['url'];
header("Location: $link");
?>
Your link should be like this
if you want this work correctly the affiliate link must be a static link no ? or = on it
good luck

I use pretty links and it works really well. But as others said php redirect is also very good. So you can choose any one.

If you want to hide affiliate links with no retaliation, use a 301 redirect. It's completely legit in the big G's eyes.

I think you should start using your own PHP code. don't use plugin. They can create problem at any time. because most of the people use plugins to do this so soon it will become bolts form the blue. So try to avoid them.