The Good Life, Wealth
When it comes to your investments, given the turmoil in the markets, cash is king right now.
But it may be time to reconsider where you park your cash until the time is right to invest it. For the past few years 50Plus financial columnist Gordon Pape has recommended high-interest savings accounts, but now he says that strategy should change. I closed out my high interest savings account last week when I saw how little it was earning. These accounts react immediately to rate changes, and since the big arrow is pointing down, I figured they are likely to drop quite a bit more in the coming months. I opted for a three-month term deposit after negotiating a good rate. Pape is recommending a return to money market funds.
He says even though their rates are also dropping, the process there is more gradual. These funds can hold securities with maturities as far out as one year, so it takes time for rate cuts to take hold.
The trick is to buy a fund with no loads or commissions and to make sure the management fees are low.