Should I Move My Money From A Money Market Account Back Into Stocks?

As the end of 2010 approaches, it will mark the fourth consecutive year in which mutual funds have experienced more outflow than in flow, meaning that investors have pulled more money out than they have put in. Even with the stock market experiencing a bounce back in two consecutive years from its crash in 2008, investors were still very cautious with their money, preferring instead to use safer investments such as a money market account. The recent recession put a real fear into investors, and they are apparently still wary even though the S & P index has shown double digit returns over the last two years. Bond funds and money markets are still a safe haven for investors as they continue to wait and see whether or not the recession is indeed over.

 A mutual fund money market account that invests strictly in bonds and short term securities is always safe, however as the stock market continues its growth from a very rough patch in the mid-2000s, savvy investors will indeed be turning more toward equities rather than bonds. While people who are at or near retirement should be keeping most of their assets in bonds and a mutual fund money market account that will guarantee a fixed income, people who are looking more long term are more interested in seeing their money grow faster by loading up on stocks. However, given the fact that the global economy is still unstable, the national unemployment rate is still wavering at historically high levels, and banks are struggling to gain new revenue streams as a result, investment in bonds and money market funds will still be a necessary evil, despite its low rate of return.

While recent gains in the stock market certainly suggest that the time to move money from bonds and money market mutual funds may be now, investors are still hedging, not quite sure if the market is indeed stable enough to move their money from the safe confines of their mutual fund money market account. Money market funds will always have a place in the market, as investors will be encouraged to plan out a diversified portfolio. The question of when to move money from safe haven to more risky waters will be dictated by action in the stock market in the coming months, as investors continue to keep a watchful eye on a market that has seen unprecedented volatility in recent years.