Parking your money.Money market funds are posting decent yields Stocks may not have registered a 20% gain in 1999, but one type of investment is enjoying a boom year: money market mutual funds. "Assets increased by 20% from late 1998 to late 1999," says Peter G. Crane, managing editor of IBC's Money Fund Report, which is published in Ashland, Massachusetts Ashland, Massachusetts is a town in Middlesex County, Massachusetts, United States. It is part of the MetroWest region. The population was 14,674 at the 2000 census. History . With a total of $1.5 trillion One thousand times one billion, which is 1, followed by 12 zeros, or 10 to the 12th power. See space/time. (mathematics) trillion - In Britain, France, and Germany, 10^18 or a million cubed. In the USA and Canada, 10^12. , money fund assets Fund assets The total value of a portfolio's securities, cash, and other holdings, minus any outstanding debts. now top those held in bond mutual funds Bond mutual fund A mutual fund which primarily or exclusively holds bonds. and bank checking accounts. Crane expects the total to exceed bank savings accounts Savings Account A deposit account intended for funds that are expected to stay in for the short term. A savings account offers lower returns than the market rates. Notes: within a year. Why the rush into money funds? "People are unhappy with the rates they're they're Contraction of they are. they're be getting in day-to-day day-to-day adj. 1. Occurring on a routine or daily basis: the day-to-day movements of the stock market. 2. bank accounts," Crane says. "They don't want to stretch for yields with two-year bank CDs because they'll lose out if yields go up during that period." Anxieties over a volatile stock market and Y2K See Y2K problem and Y2K compliant. Y2K - Year 2000 computer problems add to the lure lure the skin-covered object which runs on a monorail on a Greyhound racing track and which the dogs are schooled to chase. The lure must be kept 30 to 40 ft ahead of the leading dog so that the field is stretched out. of money funds. Money funds offer competitive yields (the national average for taxable money funds is just under 5% now), penalty-free access to your money and safety. Only one small money fund has ever stuck investors with a loss of principal, back in 1994, and investors still wound up with 96 cents on the dollar. The catch? Even at 5%, money fund returns aren't fabulous. Over the long haul Long distance. Long haul implies traversing a state or a country. Contrast with short haul. you're likely to reap higher returns from stocks and bonds. Thus, money funds make the most sense as a source of emergency cash. "Virtually everyone should have at least $4,000 or $5,000 in a money fund," says David Foster  This article or section resembles a .Please help [ improve this article] by removing excessive trivia, irrelevant praise and criticism, lists and collections of links that are of . , a CPA (Computer Press Association, Landing, NJ) An earlier membership organization founded in 1983 that promoted excellence in computer journalism. Its annual awards honored outstanding examples in print, broadcast and electronic media. The CPA disbanded in 2000. and fee-only certified financial planner Certified Financial Planner (CFP) A person who has passed examinations accredited by the Certified Financial Planner Board of Standards, showing that the person is able to manage a client's banking, estate, insurance, investment, and tax affairs. in Cincinnati. "Some people will need more, depending on their circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or ." Foster says that for the cautious investor, money market funds can also help minimize risk. "Spreading out your investments over a specific time period will reduce the risk of committing a large amount at just the wrong time, such as before a market correction Market correction A relatively short-term drop in stock market prices, generally viewed as bringing overpriced stocks back to a level closer to companies' actual values. ," he says. Don't choose a money fund simply because it has the highest yield: going from 4.8% to 5.3%, for example, will give you an extra 50 basis points, or $25 per year on a $5,000 holding, just enough to fill your car with gas twice. Foster notes you should choose a money market mutual fund based on where you already do your investing or banking. If you select a money fund through your bank (which offers lower yields than investment firms), you may be able to win lower fees on your other accounts, he adds. You also must decide whether to put cash into a regular taxable money fund or into a tax-exempt fund. IBC's Crane notes that at current rates, it may not be advantageous for most people to choose tax-free money funds. For example, if you're in a 31% federal tax bracket Tax Bracket The rate at which an individual is taxed due to a particular income level. Notes: Each income class is taxed at a different level. Generally, the more you make the more you are taxed. and you earn the average 4.8% from a taxable money fund, you'd net 3.3% after-tax, more than the 3.1% average yield on a tax-free money fund. "Tax-free funds may help if you're in the highest tax brackets and live in a high-tax state like California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). or New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of ," says Crane. "Moreover, there are some people who just don't like paying taxes, even if they take home a bit less with a tax-free fund." Top-Yielding Taxable Money Market Funds
7-Day
Fund Name Compound Telephone
Yield(*) Number
Strong Investors(**) 5.66% 800-368-3863
Scudder Premium(**) 5.62 800-854-8525
Wilmington Funds(**) 5.49 800-254-3948
OLDE Premium Plus(**) 5.46 800-872-6533
Zurich Yieldwise 5.44 888-623-4140
Prudential Cash Accumulation 5.43 800-225-1852
Transamerica Premier(**) 5.42 800-892-7587
Aon Funds(**) 5.41 800-266-3637
INVESCO Treasurer's 5.33 800-525-8085
Marshall/Class Y Shares(**) 5.32 800-236-3863
National Average 4.88
Minimum
Fund Name Initial
Investment
Strong Investors(**) $ 1,000
Scudder Premium(**) 25,000
Wilmington Funds(**) 10,000
OLDE Premium Plus(**) 25,000
Zurich Yieldwise 25,000
Prudential Cash Accumulation None
Transamerica Premier(**) 1,000
Aon Funds(**) 10,000
INVESCO Treasurer's 100,000
Marshall/Class Y Shares(**) 1,000
National Average
Fund Name Website
Strong Investors(**) www.strongfunds.com
Scudder Premium(**) www.scudder.com
Wilmington Funds(**) www.wilmingtontrust.com
OLDE Premium Plus(**) www.oldediscount.com
Zurich Yieldwise www.zurichfunds.com
Prudential Cash Accumulation www.prudential.com
Transamerica Premier(**) www.transamericafunds.com
Aon Funds(**) N/A
INVESCO Treasurer's www.invesco.com
Marshall/Class Y Shares(**) www.marshallfunds.com
National Average
(*) For the period ended 10/19/99. (**) All or a portion of fund's expenses are currently being waived or reimbursed. Source: IBC's Money Fund Report (www.ibcdata.com) Top-Yielding Tax-Free Money Market Funds
7-Day
Compound Telephone
Fund Name Yield(*) Number
Strong Municipal 3.63% 800-368-3863
Zurich Yieldwise Muni(**) 3.50 800-523-4140
INVESCO Treasurer's Tax-Exempt 3.35 800-625-8085
Vanguard Tax-Exempt 3.26 800-662-7447
Vanguard OH Tax-Exempt 3.20 888-662-7447
ABN AMRO Tax-Exempt(**) 3.19 800-443-4725
USAA Tax-Exempt 3.19 800-531-8448
Vanguard PA Tax-Exempt 3.19 800-662-7447
Calvert Tax-Free Reserves/O Shares 3.17 800-368-2748
Zurich Tax-Free 3.17 800-623-4140
National Average 2.81
Minimum
Initial
Fund Name Investment
Strong Municipal $ 2,500
Zurich Yieldwise Muni(**) 25,000
INVESCO Treasurer's Tax-Exempt 100,000
Vanguard Tax-Exempt 3,000
Vanguard OH Tax-Exempt 3,000
ABN AMRO Tax-Exempt(**) 2,000
USAA Tax-Exempt 3,000
Vanguard PA Tax-Exempt 3,000
Calvert Tax-Free Reserves/O Shares 2,000
Zurich Tax-Free 1,000
National Average
Fund Name Website
Strong Municipal www.strongfunds.com
Zurich Yieldwise Muni(**) www.zurichfunds.com
INVESCO Treasurer's Tax-Exempt www.invesco.com
Vanguard Tax-Exempt www.vanguard.com
Vanguard OH Tax-Exempt www.vanguard.com
ABN AMRO Tax-Exempt(**) www.abnamrofunds-usa.com
USAA Tax-Exempt www.usaa.com
Vanguard PA Tax-Exempt www.vanguard.com
Calvert Tax-Free Reserves/O Shares www.calvertgroup.com
Zurich Tax-Free www.zurichfunds.com
National Average
(*) For the period ended 10/19/99. (**) All or a portion of fund's expenses are currently being waived or reimbursed. Source: IBC's Money Fund Report (www.ibcdata.com) |
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