INTEREST RATES: HOW MUCH RISK ARE YOU WILLING TO TAKE?
It’s hard to get more than 1% for your money right now and it has been that way for more than a year. These low rates are killing seniors, retirees, and anyone living on a fixed income that relies on interest as part of their income. You slave away all your life, putting away as much money as you can, and then when you finally get to retirement age, you find your money has no earning power. It’s sad and frustrating.
The best money market interest rates are actually approaching some CD rates and that is not the way it usually is. In normal times, MMA’s where usually used just as a place to temporarily park your money while it was in between investments that paid much higher. Now though, with all interest rates so low, money markets have actually become a viable investment alternative of their own.
If you want to make money on your money in 2010, you pretty much have to put your cash in something with risk such as stocks. If you want anything that is risk free, you will just not get a rate anywhere that is going to look appealing. Even if you put your money in a 15 or 30 year CD, you are not going to get a rate that is worth it.
Right now I want to put my money in things that have zero risk. I am scared of the stock market and everything President Obama is doing to the country. I think there is great risk in stocks which have run up to almost 11,000 and I don’t want to be caught fully invested in stocks if the bottom drops out like it did 3 years ago. No risk investing is what I am looking for.
Unfortunately, anything with no risk pays nothing. And since money market accounts pay almost as much in interest as bank CD’s without the withdrawal restrictions like CD’s have, I have a fair amount of my money in a MMA. I can take my money out at any time (all of it, part of it, or any amount of it) and there will be no penalties. If interest rates do go up, I am ready and have access to my money to take advantage of it. For the first time in my life, I have a stand alone money market account just because it pays almost as much interest as I can get anywhere else. Who would have ever believed that!
