Caller: Where can you keep cash where it can be liquid yet have access to it immediately.
Bob said one possibility would be a quality money market fund. You won’t get any kind of meaningful return on that money in this kind of interest rate environment. It is really about safety and having access to the fund. Some money market funds have check writing privileges. For the ultimate safety, you would go to a treasury based money market fund or to one of the big well known blue chip financial money market funds and there you would likely get check writing privileges as well.
EC(David Korn): Bob has long recommended the Vanguard Prime Money Market Fund (VMMXX) for such purposes which allows you to redeem shares by writing a check for $250 or more. Read the prospectus at the following: http://www.vanguard.com/pub/Pdf/p030.pdf
Kirk's Comment: Money market funds offer terrible returns these days. Vanguard only pays 0.01%. There are several FDIC insured savings accounts listed here that pay almost 100 times more or nearly 1.0%. In every issue of "The Retirement Advisor," David and I update where you can get the best interest rates for cash that is 100% safe, usually with FDIC insurance.
Kirk's Comment: We don't jump from fund to fund each month for a few tenths of a percent, but if you can certainly do better than 0.01%. If you have new money looking for a 100% safe parking place, then look at the survey of top savings rates at Savings Account Rate Survey
David Korn's Stock Market Commentary, Interpretation of Moneytalk (Bob Brinker Host), Financial Education, Helpful Links, Guest Editorials, and Special Alert E-Mail Service. Copyright David Korn, L.L.C. 2013