WHR - A Mass Exodus Of $6 Trillion In Money Market Funds Can Fuel Big Gains For SCHD

2024-03-09 04:45:37 ET

Summary

• Money market funds currently offer high yields, but there is a risk of a significant decline in interest rates, leading to a mass exodus from these funds.
• Investors should consider buying dividend stocks now to lock in high yields and potentially benefit from capital gains as rates fall.
• The Schwab U.S. Dividend Equity ETF and British American Tobacco are two investment options to consider for high yields and potential capital gains.

Right now there is significant competition for your dollars when it comes to yield. Not that long ago, if you had some cash it would basically earn zilch if it was in your bank account or if it was in a money market. However, that has all changed and most money market funds are now yielding over 5% and banks are even offering a meaningful yield on CD's and savings accounts. But just as we should not have been taking a zero interest rate policy or "ZIRP" for granted, we should also realize that the days of parking cash in money market funds that earn over 5% (currently) are also numbered. It already appears that many investors are getting complacent with the use of money market funds because there is now roughly $6 trillion in cash sitting in these funds ....

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