| Money market yields are high today because inflation is high. After deducting inflation, Vanguard's money market fund is a net money loser. (Although it's less of a money loser than the 99% of money market funds that yield less.) According to Vanguard, the fund has returned 1.85% year to date. (Remember it wasn't yielding that much at the start of the year. And it may not yield that much at the end of the year either.) The fund has returned considerably less than the nearly 10% return of the S&P 500 year to date. And it's lagged the Nasdaq, which is not only up 25% but officially back in a bull market, by even more. Yes, there is a possibility that we could have a recession in the months ahead and the market would turn south again. If that happens, however, the Federal Reserve is likely to step in and cut rates again to stimulate the economy. That would be good for stocks. But it would be bad for money market yields. Why? Because these funds hold only very-short-maturity debt, generally T-bills and high-grade commercial paper. When the rates on those go down, so will money market yields. So, enjoy those high yields while you can. But don't overdo it. Unlike bonds - or even certificates of deposit - a money market yield is not locked in for any length of time. After inflation, you're earning essentially nothing. (Not the best way to increase your net worth or grow your portfolio.) History demonstrates that no asset class outperforms a diversified portfolio of stocks over time. In sum, for over a decade money market yields were so low that T-bills and money market accounts were hardly worth considering - except as a parking place for money that was soon to be spent or invested. But plowing long-term capital into a money market fund today to collect a 5% yield that may be gone tomorrow is not sensible risk management. It used to be that cash was trash. That's no longer true. But holding too much cash? That's rash. Good investing, Alex | 
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