Money Funds to the Rescue

Money funds are mutual funds which invest in short-term debt instruments. So short that the average maturity of the holdings in the average money fund is 90 days or less. The short average weighted maturity of the funds has allowed them to historically maintain a net asset value of $1.00 and the distinction of being considered a “safe” investment [even without the federal backing of U.S. Treasuries and bank products]. Money funds are liquid and offer check-writing privileges, which make them one of the best parking vehicles for short-term cash after investors liquidate stocks, real estate, or other assets. The yields paid out on money funds remain competitive with the funds listed below currently yielding more than a 10-year Treasury Bond.

Money Funds Yields as of July 19, 2007

McMorgan Principal Preservation
5.20% yield, $5,000 minimum
Harbor Money Market Fund
5.18% yield, $1,000 minimum
GE Money Market Fund
5.17% yield, $500 minimum
TIAA-CREF Money Market Fund
5.16% yield, $2,500 minimum
Vanguard Prime Money Market Fund
5.13% yield, $3,000 minimum
Fidelity Money Market Fund
5.13% yield, $25,000 minimum

* Yields quoted are the 7-day Effective Yields which factors in compounding of income.

More information about money funds is available here.