Notice from Alerus
Effective October 1st, 2020, the Alerus money market interest rate will reset from .23% to .04%, which equates to an APY of .04%. As of September 30th, the 1-year yield on Alerus money market is 1.30%.
Our Thoughts
With the Federal Reserve targeting extremely low short-term rates, rates of money markets, bank savings accounts, and bank checking accounts have dropped to minimal levels. Like bank accounts, the Alerus Money Market fund is FDIC insured.
If you were looking for an alternative investment that provides a higher yield without taking on a lot more risk, you may want to consider the Vanguard Short-Term Bond Index Fund Adm. Moving up from money market investments, I consider short-term bonds to be the second most conservative investment in the plan. Short-term bonds are less affected by interest rate movements than long term bonds, and this fund focuses on high quality bond issuers. Now it is not FDIC insured, but it is a consideration if you are looking for a higher yield than what money markets are now offering.
To learn more about the fund, you can access Vanguard’s website using the link below:
https://investor.vanguard.com/mutual-funds/profile/VBIRX
If you would like to discuss your account, Contact Us.