Despite their low yields, money-market mutual funds still hav some appeal.
Many people use money funds as a short-term parking lot for cash. When they flee other investments, they turn to money funds as a rest stop.
Safety and liquidity are two reasons. First, money-market funds invest in short-term debt from financially strong corporations, making them super-safe. Second, assets may be withdrawn at any time.
And, though money-fund yields are low, they compare nicely with those of other short-term, interest-bearing products.
As with all interest-bearing products, yields vary. Therefore, consumers should shop for funds that consistently pay above-average yields. If you need help, IBC/Donoghue Inc. has a free report that lists the 10 highest-yielding taxable and tax-free money funds in five specialized categories.
To request a free copy, call (800) 445-5900, Ext. 1, or write to Moneyletter, 290 Eliot St., Box 91004, Ashland, Mass. 01721-9104.