Where do I keep my money? at Tuesday, October 14, 2008

There's been a lot going on in the financial district lately. Companies are being bought and banks are being merged. Wachovia was bought by Citigroup. Times like these, you'd ask, where is the best place to keep my money?

The answer may be an easy chest in the attic. But it seems that bank deposits are still safe as long as you play your cards right. For example, in the US and same in the Philippines, bank deposits are insured to a certain amount by the Depository Insurance Company. Just don't go over that limit and you should be safe.

According to Yahoo! Finance:

Even though one prominent money fund just broke the buck, Uncle Sam has recently stepped to shore up confidence in these popular cash vehicles. On Sept. 19, the Treasury Department put in placea new guarantee for money funds - essentially a type of FDIC insurance - promising that investors will get $1 back for every $1 invested, with no dollar limit.

The so-called Temporary Guarantee Program will last only three months but can be extended into 2009 if needed. Because it only applies to cash that was in money funds as of Sept. 19 - and since not all money funds will choose to sign up - you still have to do to some homework to stay safe.

So call your money funds to see if they intend to purchase this government insurance. Also, stick with financial firms such as Vanguard, Fidelity and American Funds that have the financial resources to preserve the $1 share value in their funds.

And don't "stretch" for yield. The average yield for taxable money funds is 1.9%. If you see one whose yield is much higher, that could be a sign that it's taking too many risks.

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