"Saving Starts to Pay Again"
"Saving starts to pay again" writes the Pueblo Chieftain. The Tribune News piece tells us, "With interest rates rising and the stock market cooling from its big gains last year, some savers and investors are putting more money into long-dormant safe investments such as money market funds, bank certificates of deposit and Treasury securities. The net assets of money market mutual funds totaled $2.89 trillion as of June 6, the most since the financial crisis in 2008-09, according to the Investment Company Institute, a mutual fund trade group. At Vanguard Group, one of the nation's largest mutual fund providers, net cash flows into money market funds totaled $10.5 billion in the first four months of this year -- nearly twice the $5.3-billion inflow during the same period last year -- to $238 billion." The article explains, "Money funds and other cash-related products were paid scant notice during the post-recession stock market rally because they paid so little, carrying interest rates not much above zero. That was largely due to the Federal Reserve Board's monetary stimulus policy, in which it kept its benchmark short-term rates at nearly zero in a bid to help the country recover from the financial collapse. Stocks soared after the Fed's move. The stock market enjoyed a nine-year bull run and investors were disinclined to keep much money in cash. That was true even for the middle class, which poured most of its money, including 401(k) retirement money, into stock mutual funds rather than low-yielding money funds. The scenario changed starting in December 2015, when the Fed began nudging interest rates higher once again. The central bank has done so several times since then -- most recently on June 13, when it lifted its key rate to a range of 1.75 percent to 2 percent -- and two more increased are expected this year. In response, yields on a variety of fixed-income cash products also rose."
