The May 2008 issue of Money Magazine, which arrived in subscribers mailboxes yesterday, features an article (p.49) entitled, "Are Your Assets Really All That Safe?" Senior Editor Walter Updegrave writes, "Remember that free lunches can be expensive. You also need to be careful about reaching for higher yields in your cash investments. There will always be investments that seem to offer fatter yields than plain old money-market funds without much extra risk."

Money cites bank-loan funds, which "have lost nearly 8% of their value" and auction-rate preferred securities, where "many owners have been unable to get out," as recent examples.

The lesson, Updegrave says, "When it comes to your cash investments -- the ones you can't take chances with -- limit yourself to secure options like short-term FDIC-insured CDs and money funds. True, money funds don't guarantee you against losses. But if you stick to funds issues by firms with solid reputations, your chances of experiencing any loss are minimal."

This month's Money also mention the "great opportunity in tax-free money-market funds" (on p.51), though the attractiveness of municipal yields is already fading. It quotes Alpine Municipal MMF manager Steve Shachat on muni bond insurer concerns, "The fears are overblown."

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