Financial Planner Has Advice For Stashing Cash

With commodities and money markets fluctuating so much, many people may be wondering if there is a safe place to stash their cash.

Financial professionals say those who have been losing money in stocks shouldn't cash out right now because they want to be in the market when it rebounds. But for the money that may be needed soon, as money kept in a savings account, a financial planner has some safe suggestions for his worried clients.

"Mostly it is people calling to be reassured," said Dennis Collins, a certified financial planner.

Collins says the three best places to stash the cash that may be needed soon includes a bank -- checking accounts, savings accounts and CDs; in money market funds; and in short-term U.S. Treasury bonds. Insured banks are safer now than they've ever been.

"If you're in a bank account in a bank and it's FDIC insured, then there's nothing to worry about. If the bank does fail, it's covered by the FDIS," Collins said. "So people shouldn't feel concerned about having to worry that they need to take it out and put it in the mattress, or put it in a mayonnaise jar and bury it in the backyard."

Banks also have insured money market funds, but now non-bank money markets are guaranteed they won't lose value.

"The Treasury instituted a temporary money market guarantee program to provide some confidence that this isn't going to happen; we're going to make sure there's coverage," Collins said. "It's important for people to understand that money markets that participate in that program had to elect to participate and pay a fee to the Treasury, so it's important to make sure that your money market fund participates in the program."

Treasury bonds aren't yielding much these days, but they're safe.

"They are still considered to be the safest of bonds. You can buy Treasury bills for very short-term securities where they can be for a few days, a few weeks, a few months; and that's very safe," he said. "The challenge with those right now is that the yields have come down so much that on the very short end you're almost paying to put your money in those. But they are of course the safest place to park money."

One important note on the guarantee for non-bank money market accounts -- that's based on whatever the balance was on Sept. 19 -- so for those who open a new money market -- it's not guaranteed.

Planners say don't dump stock funds, it's just going to lock in the amount lost in the past few weeks.

http://cbs4denver.com/consumer/financial.planning.advice.2.838656.html

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Financial Planner Has Advice For Stashing Cash