Morgingstar asks, "Is It Time to Ditch Your Money Market Fund for Longer-​Term Bonds?" The article comments, "Rate cuts are coming. It may not happen until September, December, or even 2025, but market watchers agree the Fed will eventually ease policy as inflation improves. That means those cushy 5% rates on money market funds will go lower. With the outlook for bonds looking better, strategists say investors should look to fixed income to lock in higher yields and protect their portfolios against market volatility in the second half of 2024. To be clear, bonds and cash serve very different functions in portfolios. Cash will always be the safest bet for short-​term spending needs. Bonds, while safer than equities, will always carry some risk of losing money. The longer-​term the bonds, the greater the risk of short-​term price swings when interest rates rise or fall." The piece adds, "While money market returns may be attractive right now, investors will see them fall rapidly once the Fed'​s rate-​cutting cycle begins.... Of course, this doesn'​t mean investors should liquidate their cash holdings and move into riskier investments in one go. Siluk says investors can extend duration slowly. Oftentimes, this process happens first through short-​dated investment-​grade bonds, and then more intermediate longer-​dated bonds. Falling yields also mean more price appreciation for bonds, which investors can’​t achieve with cash."

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