Investors poured their assets into money market funds earlier this month — over $66 billion worth over a week, according to Reuters. That’s the largest inflow since early December 2024.
At a moment when stocks and bonds are seeing plenty of volatility, money market accounts can be a relatively safe haven for investors.
Money market funds typically invest in short-term securities — mostly federal and municipal bonds. In some cases, it also includes corporate bonds. Those are investments that are considered low risk.
Right now, they get a pretty good return, said Steven Blitz, chief economist at TS Lombard.
“If you put in a money fund and you earn between 4% and 4.5%, that’s good money against inflation,” he said. “It’s a real return, and so it’s attractive to people.”
Especially at a time when other investments have been swinging around a lot.
But even though stocks have risen in the past month, a lot of investors are feeling cautious, per Sandi Bragar with the wealth management firm Aspiriant.
“The news cycle changes so much, and so I think there’s more emotion in investors’ minds, and there’s more uncertainty about what to do, and I think that’s paralyzing a lot of people,” she said.
All of this is pushing many investors toward safety — like money market funds. But they might not be the right choice for everyone, Bragar said.
They make more sense for older investors who are nearing retirement and don’t have as much time to take risks with their money.
