Some financial firms are urging investors seeking higher returns to convert cash into short-term bond funds, Reuters reports.
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Stung by losses in the stock market, Americans are getting warier with their investment dollars, so much so that assets in money market funds and bank savings accounts have topped $5 trillion.
Some assert that due to the 0.75 percent rate of return on the average money-market fund versus than the 3% inflation rate, consumers are greatly overpaying for financial peace of mind.
Opponents of this short-term bond strategy warn that in a search to increase yields, investors could be taking on increasing risk, and talk about a potential bond bubble has been growing.
