Money market rates have discouraged many investors over recent years. The average taxable money market account in November 2007 yielded 4.18%, which means $24,000 invested could generate $1,000 in taxable income. For Thanksgiving 2012, it would have taken $5 million at the current average yield of .02% to achieve $1,000 in taxable income (BTN Research).
Please consider the following thoughts as you evaluate whether or not to invest cash or leave cash in a money market account as you start 2013:
1. Are my current goals being met by the rate that I am earning? Do I need more income from this account?
2. Is this money for short-term use? If it is not, then is a money market the best investment return alternative for this money?
3. Do I have enough cash for an emergency purchase or expense? Do I have three, six, nine or even twelve months of reserve money invested in savings, a money market or other accessible account?
If you have not evaluated the reasons for having money in a money market at current interest rates, consider taking a look at your options. Your Investment Services Financial Consultant can help your determine a strategy for income, growth, capital preservation or total return for your savings over the intermediate and long-term time periods. Moreover, if you find that you need to put your money to work for you, we can help.
Securities and investment advisory services offered through Financial Network Investment Corporation, member SIPC - Founders Federal Credit Union, Founders Financial Group, LLC and Founders Insurance Services are not affiliated with Financial Network Investment Corporation. Financial Network Registered Sales Branches are located at 607 N. Main Street, Lancaster, SC 29720; 1290 Old Springdale Road, Rock Hill, SC 29730; 100 Springcrest Drive, Fort Mill, SC 29715; 1307 Boiling Springs Road, Spartanburg, SC 29303.
Not NCUA Insured - No Credit Union Guarantee - May Lose Value - Not Deposits -Not Insured by any Federal Government Agency.
This article was written by Derek Hawk with Founders Investment Services Team. It was published in Founders Open Exchange Newsletter (January 2013).