Money Market is King of Conservation
Money
Market Conservation Techniques
9/22/07
If your favorite emini is too up and down for you these days, then may we
suggest a sure fire way NOT to lose money in these turbulent emini markets.
In comes the good ole Money Market account.
Days of Old
All of our lives, our parents instilled in us the need to save money. With
mine, they made a savings account sound like getting in on the
Berkshire-Hathaway IPO. But times have changed, eminis are here for those
willing to take the risk, and so have interst rates changed on various bank
account types.
CD's Are So Early 00's
I remember hearing stories from baby boomer generations about how CD's paid
upwards of 10% back in the day (before our beloved eminis were ever thought
of). I have watched 5 year rates go from 0.5% to around 4.5% today. Actually
their are a couple of banks offering around 5% on 6 to 12 month
certificates. My guess is that they are expecting the Fed to cut interest
rates soon, that being the logic for 1 year CD's paying more than 5 year.
Bonds... Government Bonds
Interest rates on the 10 year bond is at around 4.5% today. That is money
that will be locked up for, as the name implies, 10 years. I have never been
a T-bond fan. It's just hard to love the emini and the bond at the same
time.
The fact of the matter is that a good money market account pays more than
99% of the CD's or bonds available today. The downside is that you cannot
lock in the rate and it will change. With emini volatility and cash
liquidity running so out of hand these days, the conservative investor need
have at least one money market account with a minimum 5% of his portfolio
sitting there, ready to pounce on the next emini buying opportunity. For
that reason, money markets are by far today one of the most profitable,
assured, and easy investments you can add to your portfolio that give you
the liquidity that you need.