Where to Park Your Cash

The Advantages of Yields from Money Market Funds, Short-Term Bond Funds, and Treasury Securities

We understand the importance of maximizing the yield on your cash holdings. While traditional savings accounts may provide a small amount of interest, they often fail to keep pace with inflation and do not provide the flexibility to invest in other opportunities. That’s why we recommend considering alternative options for parking your cash, such as money market funds, short-term bond funds, and treasury securities.

Money market funds are a type of mutual fund that invests in short-term, high-quality debt securities such as Treasury bills and commercial paper. These funds are designed to provide a stable return and preserve capital. They are considered to be among the safest investments available, as they are required to maintain a high degree of liquidity and credit quality. Additionally, the yields on money market funds are typically higher than those on savings accounts, making them a great option for parking cash.

Short-term bond funds are another option for parking cash. These funds invest in bonds with maturities of less than three years. This means that the fund’s holdings will mature relatively soon, reducing the risk of interest rate fluctuations. Short-term bond funds also provide a higher yield than money market funds, making them a great option for those looking to earn a higher return on their cash.

Treasury securities are debt obligations issued by the U.S. government. These securities are considered to be among the safest investments available, as they are backed by the full faith and credit of the U.S. government. Treasury bills, notes, and bonds are all options for parking cash, with varying maturities and yields. Treasury securities are also considered highly liquid, which means that they can be easily bought and sold on the open market.

While traditional savings accounts may seem like the easiest option for parking cash, they often fail to provide the best returns. Money market funds, short-term bond funds, and Treasury securities are all alternative options that provide higher yields and greater flexibility. By investing your cash in these instruments, you can earn a higher return on your money and have the option to invest in other opportunities. Our team at Johnson Financial is here to help you review your options, and to ensure that your cash is working as hard as it can for you. Feel free to call our office to discuss at 602-242-4000.