Where To Park Your Cash For A Crunch

Ray Martin On Safe Places To Invest Funds You Save For Emergencies, Such As Losing Your Job

(CBS) 

Money Market Funds

These are not FDIC-insured bank products, but instead are mutual funds. Currently seven-day yields for taxable money market funds range from 1.5 percent to little over 2 percent, and offer daily access without restrictions. Often, you'll have to start with a minimum balance of about $1,500. Here, an important distinction: Money market mutual funds are regulated under Rule 2a-7 of the Investment Company Act of 1940, and therefore seek to maintain a stable share price of $1. These are registered with the Securities and Exchange Commission as mutual funds. Most commonly, these are offered through brokerage accounts.

After the Prime Reserve Fund notoriously “broke the buck” last year, which created a panic, the U.S. Treasury guaranteed the value of money market funds that participate in the Temporary Guaranty Program for Money Market Funds. This program runs through April 2009, unless the government extends it. The catch is that only balances on deposit as of September 19, 2008 are covered under the Guaranty Program, so new money you put into money market funds is not covered. That notwithstanding, most folks believe the risk of money market fund failures is behind us, and these funds are seeing money coming back into them. Money market funds currently hold over $3.6 trillion.

Check out money market funds offered by Fidelity Investments, Charles Schwab, Vanguard and T. Rowe Price.

Certificates Of Deposit

These are time deposits offered by FDIC member banks and can be purchased from local banks or from banks across the nation, either through an online bank account or through a brokerage account. The catch is that if you have money in a CD and need to withdraw it before the end of the CD term (before maturity), then the bank may charge an early withdrawal penalty, which can be equal to one- to three-months' interest. With that catch, it's best to consider only using CDs that mature in three or six months, and splitting some of your money into a three-month CD and some money into a six-month CD. But with rates on three-to-six month CDs at around 2 percent to 2.5 percent, some folks might be tempted to opt for a one-year CD offering a little over 3 percent. But remember, you'll lose some interest if you later need to withdraw some of that money before the end of the term, which could more than offset the higher yield you were earning.

Check out rates on FDIC-insured CDs offered by EverBank, GMAC Bank, HSBC Direct and CapitalOne Direct Banking and compare their yields to the CDs offered by banks in your area.

[4marlene]

Better stock up on lots of rice and beans. When grocery shelves become empty, you won''t be able to eat your money or ammo.

[tawpdawg111]

Hey you schmucks wanna safe place for your money call me at 1-800-IMASCHMUCK.

100% guaranteed!

[greeneyes222]

This man is so out of touch with the everyday American it''s pitiful.

[banders6]

Ray I think your article is very good, but you stop short of giving the whole picture. You are predicting that banks will be around in six months to a year, but what if not? Hopefully the Russian prediction is false and we will be here after 2010. So do you buy gold, if so coin, bullion, or what else, surely not real estate? Will Swiss banks be around? If banks fail I assume that gold will go up in price, banks get stronger and gold should hold or go down in price. Where do you buy gold, then where do you sell gold. Lots of places on the web, but would you trust any? Please continue your article beyond one year.