Q: I pulled my money out of mutual funds and put it into money market accounts just before the market tanked big time. Where is the best place to put that cash now? I want my cash to be safe but still earn some interest. Should I put my cash into a CD or other investment?
This is retirement money and possible down payment cash that I can’t afford to risk, but there must be something that pays better than a money market account but is still reliable.
A: If you want your cash to be available and safe, then choose either a money market account or a CD at an FDIC-insured bank or federally insured savings and loan or a cash money market fund in a company participating in the federal government’s program to secure those cash funds. There aren’t any other investments that are as safe or pay as well without taking any real risk.
But honestly, you will probably want to start thinking about reinvesting the funds that are for retirement back in the stock market, especially if you have more than 15 or 20 years to invest before retiring. You won’t be able to beat inflation with just CD interest rates, and you’ll want to make sure that you’re getting in on the eventual upswing in the markets.
Cash that will be used in the next three to five years should stay in a money market deposit account or a CD, so it doesn’t evaporate in the current market conditions.
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