eyes on
Money Market Funds
As interest rates rise, investors are stashing cash in money market funds, aka mutual funds that invest in short-term securities like Treasury bills. Let us explain. Fixed-rate bonds lose value when interest rates rise (hi, interest rate risk). But money market funds are invested in short-term assets, making them less susceptible to losing value when rates go up. The TLDR: The Fed’s rate hikes mean investors can earn more $$$ in interest from money market funds. Before you pour cash into them, here are three things to do.
Your move:
Consider your risk tolerance. Bank accounts are FDIC-insured (up to $250,000 per depositor), money market funds are not. Though they’re generally considered safe investments, there is some risk involved. For a less risky option, go with a high-yield savings account instead.
Open a brokerage account. If you decide that investing in money market funds is your move, you can buy into them through a brokerage account with a financial services company like Fidelity or Vanguard.
Find the right fund for you. Some invest primarily in government securities, while others include corporate bonds. Pay attention to the dividends and expense ratios on funds, which will show you how much you’ll earn in interest and pay in fees.
for the group chat
Over working for the sake of working?
You might have “quiet ambition.”
Renters are channeling “MTV Cribs”…
By showing off their spaces online and making $$$ in the process.
Millennials feel broke...
Medical debt under $500 is being wiped from credit reports…
Highs and Lows
Several big banks reported strong earnings last week, but that doesn’t necessarily mean the economy is on solid ground. Earnings may look good because higher interest rates tend to = higher profits. But deposits are still falling for a lot of banks, causing cash flow issues. What does this all mean for interest rates? Treasury Secretary Janet Yellen says she hopes that banks being cautious lenders means that the Fed can cool it with the rate hikes soon.
5-minute money tip
Apply for a travel credit card.
Planning a summer getaway and looking for ways to save $$$? Consider getting a travel credit card. Perks can include things like a generous sign-up bonus, airport lounge access, and TSA PreCheck or Global Entry. Plus, rewards that can be redeemed for flights and hotel stays. But keep in mind: Some travel credit cards have steep annual fees and high APRs, which is why we recommend you pay off your bill on time and in full each month. PS: Here are more ways to save on travel this summer.
Subscribe to Skimm Money
Your source for the biggest financial headlines and trends, and how they affect your wallet.