Money-market funds and savings accounts are liquid and stable, and can offer competitive rates. What’s not to love? Well, you could be earning more on your money elsewhere, especially now that money-fund rates have declined and may be heading lower.
While you need full access to some of your money to pay the usual bills and as a safety valve for surprises, such as an expensive auto repair or a medical bill, overinvesting in cash-equivalent funds has an opportunity cost. The key is to strike the right balance.
