A Few Cash Alternatives

I know a lot of Alert readers are committed to having a high cash position during this bear market. So, it’s no surprise to me that lately I’ve received a lot of questions regarding cash alternatives. Many of you are understandably not content with the very low rate of return being paid by today’s money market funds.

And while I feel that the money market is the safest, most liquid place to park your serious money during this time of market flux, I do think there are several safe alternatives to your run-of-the-mill money market fund.

One of my favorite money market alternatives is the iShares Barclays 1-3 Year Treasury Bond (SHY). This investment seeks results that correspond generally to the price and yield performance of the short-term sector of the U.S. Treasury market as defined by the Barclays Capital 1-3 Year U.S. Treasury index.

This short-term Treasury bond fund is a good place to park cash. In fact, we have a 25% allocation to this fund in our High Monthly Income. This fund has served us well during the past year, and I suspect it will continue doing so in the year ahead.

The current yield on SHY is 2.05%, so if you are looking for a good place to get a little more yield than your money market account, check out SHY.

In addition to SHY, there are two other cash alternatives that are worthy of checking out. They are the WisdomTree U.S. Current Income Fund (USY), a fund yielding 0.35%, and the PowerShares VRDO Tax-Free Weekly (PVI), which has a current yield of 1.64%. Both of these offer decent cash alternatives, although they pale in comparison to SHY in terms of yield.

So, if you are looking to take a little of your money and put it into cash alternatives, here are three solid candidates.

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