Even Money Market Funds Are Risky

Even 'safe' money markets show their soft underbellies in today's market
By Jim O'Neill,  Newser User
Posted Sep 18, 2008 10:49 AM CDT
The Times Square news ticker displays financial headlines in New York.    (AP Photo/Mark Lennihan)
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(Newser) – As one safe haven after another disappears—from money market funds to stock investments—financial advisers are telling consumers to take a more active role in their planning, reports the New York Times. But first, do your homework and understand what you’re investing in, experts say.

Here’s a primer:

  • Money market mutual funds invest in (supposedly) low-risk securities. Experts say funds with bigger, more diverse companies are safer than those with small money management firms;
  • Money market deposit accounts are FDIC insured (up to $100,000) interest-bearing bank accounts with lower risk;
  • Treasuries offer low yield but are among the safest investments;
  • Generally, the higher the yield the higher the risk.