Couples and Cents

Money market funds are on their way down. By the end of February, the average taxable fund yield could be down to 2.4% . That’s not enough interest to keep up with inflation. However, there are a couple of alternatives that will help you preserve the value of your savings.

• Online Savings account - Etrade is currently offering 4.4% interest on their savings. There is no minimum balance and no account fee. This is a much more flexible option than a CD, however the rates can change at any time.
• Certificate of Deposit (CD) - If you are willing to lock away a larger chunk of money for a while, CD’s can provide a solid rate. IndyMac  is offering 4.8% on a 7 month CD with a minimum deposit of $5,000. The advantage in a CD is the ability to lock in a rate for a given period of time.
• Muni-Bond Funds - Although slightly riskier, muni-bonds offer tax exempt interest rates. Schroder Short-Term Muni Bond has a rate around 4%.

What Savers Should Do as Rates Drop