Posted on January 8, 2010.
Unstable employment and 401k --- stick to money market funds safe? My work is quite unstable and I am glad to be gone in less than a year.
I was put in the 401k about 9 months and will continue to do so. Right now everything is in a money market fund at 1%.
Would you continue to play safe and keep the fund in a low yield until I find a word better and more stable long?
You can buy Treasury bills of the United States who pay a higher interest rate. But that could block your money for a long period of time.
I do not think there is a safe investment, except in the things you need or will need in the future. Because the stock market can crash again and leave you with heavy losses. And you can even lose money on Treasury bonds if U.S. bond prices fall and interest rate rises because of too much borrowing by the Government of the United States.
If you might need the money in the near future. Then, keep your money in an FDIC insured account is your safest and most prudent bet.
Assuming you still going to have to take that money for a long time until you retire, that should be your time horizon for your 401k. Not one year or until you change jobs.
The money you will need, now or in the very near future when you may be unemployed or changing jobs is the money you need to keep in a safe place, such as CD and money markets.
Match your funds with the horizon of time when you need it.
