While this blog is about money market interest rates and not stocks, Cramer’s article is of interest to me for one reason: if people aren’t putting their money in stocks like they used to, they must be putting it in interest bearing vehicles of some kind instead. And anyone who knows anything about interest knows that interest rates are at or near an all time low!

With interest rates being so low for so long now, it is surprising to me to hear that interest in stocks is waning. I know a lot of people were hit hard when the market dropped from 14,000 down to just below 7,000 but anyone who stayed the course has made much of that back. If you didn’t do any panic selling then you will probably get it all back, eventually.

I’m scared of the stock market too but what alternative do I have? A 1% interest rate in a CD or Treasury bill is an insult and it feels the same as getting no interest. It is hard to just sit back and accept a 1% interest rate or thereabouts for the money you worked so hard to get. It makes me want to fight back and the only way I know how to do that is to buy stocks. Of course that comes with a lot of risk and that is the dilemma so many people are in.

Have that many people just given up on investing in the stock market? With the accessibility of information and the ease of trading at an all time high, you would think interest in trading stocks by every day average Joe’s would remain high. The old days of having to run everything through a real broker on the telephone are long gone and anyone can anonymously make trades. I would think that would continue to attract new investors.

Interest rates are going to remain low as long as this administration is in power, that is clear. But I’m not sure I am ready to buy into Jim Cramer’s hypothesis that individuals are too fed up with stocks to get back in. I think they will eventually get back in when they are fed up with loaning out their money and getting peanuts in return.

Interest rates are low enough now that they are lulling me to sleep. As my CD’s mature from last year, I look online to see what I can get now in interest for the money. Last year I was getting somewhere between 1% and 2% and right now I can’t get anything near that.

After doing the math, when rates get down to where they are now, the incentive to take the trouble to actually leave my house and go to the bank and open up a new CD is almost nonexistant for me. Likewise it is almost not worth my time to pick up the phone or go online to open up new accounts either.

So, I find myself sitting here wondering when will interest rates go up and doing nothing other than letting my money sit there everyday earning nothing. This post is kind of a pep talk for me because even though rates are low, something is better than nothing.

If I don’t want to lock up my money for a year in hopes rates go up,  then I should have it in a money market. Again money market interest rates aren’t any better but they do give me liquidity and something that is risk free. Something is better than nothing right?

It really upsets me that you never seem to hear anything in the news about how these low interest rates hurt people. I know many people are in debt but what about those of us that aren’t? What about seniors who have all their money in cash equivalents and are making next to nothing? How are they going to survive? Nobody seems to care and it gets no publicity at all. It’s too bad that we are a nation of debtors instead of a nation of savers.

You can see by the chart below that one year US Treasury rates have been below .5 of a percent for quite some time now and they are projected to stay that way for much of, if not all of 2010.

Buying US Treasury notes used to be the thing to do to get a safe guaranteed interest rate if you didn’t want to put your money in something more risky such as stocks. Retirees and people who live off a fixed income were candidates to buy Treasury’s and now with rates so low, what can you do?

When you buy a US Treasury you are loaning money to the government. In today’s political environment, that alone may be reason enough for some to not buy them. But with interest rates so laughably low, why not look for other sources of interest.

For a 1 year Bank CD you can now get about double what the Fed is paying you and if you put your money in a credit union you might even be able to get triple the rate. There are many credit unions that anybody can join so they are worth looking into.

The best money market interest rates are also comparable to what Treasury bills are paying and with them, your money is not locked down at all. Of course the more money you have will give you better rates for money market interest but if you have more than $30,000 or so, you should be able to get a rate that is similar to a US 1 year Treasury bill.

Money market accounts historically paid low rates but now with rates so low everywhere, they are not that bad and sometimes better than other options. Again, the more money you have means the better rate you can get and it all comes without having to commit the money for any period of time as you always have access to it without penalty.