Bruce Bent II, inventor of money market funds says if you’re seeking safe harbor for your investment funds, you should consider accounts that yield better than bank accounts but safer than the stock market.
Money market funds continue to be a smart repository for cash. But why should you care about these funds? the yield and the safety. First, money market funds almost always offer a higher return than savings accounts, and they produce a greater yield than bank CD’s. They also routinely beat out the yields of even the best bank money market accounts.
As short-term rates rise, investors with money market funds can benefit because the fund managers are continually adding new debt to their portfolios, which in turn carry higher yields. And then there’s the liquidity. Yep, you can dispose of the funds quickly, making it an ideal place to store cash.
Now a look at risk. Due to the short term investment, it significantly reduces the interest rate risk and the risk of default. This has been a sound solution for the wealthy looking to invest in a large number of short-term investments and distribute the borrower’s risk very widely. According to Bruce Bent, more individuals need to take advantage of money market funds.
Investors can write checks off their money market accounts and you can get the highest yield by seeking out those funds with the lowest expenses. Bruce Bent suggests looking at the different types of funds, like taxable money markets, which provide very high yields and tax-free funds, which help you skip the federal taxes. There are also specific funds for states which help investors bypass state taxes.
For the last 26 years, Bruce Bent II has been the Vice Chairman and President at Double Rock Corporation. He is an experienced executive providing professional guidance in financial management and needs assessments, as well as process improvement and operational streamlining. Bent has an extensive history in the investments industry, stemming from his decades of experience as a CFO and Interim Chief Financial Officer at Forterra Environmental Corp and Axiotron Corp.
Bent holds a Bachelors degree in Economics from St. John’s University and he is a Chartered Accountant, and was awarded a CA from the Canadian Institute of Chartered Accountants.
For more information on Bruce Bent follow him on Twitter.