Rough times for money market funds

Well over a dozen fund companies have waived fees or closed funds to new investors, including the giant mutual fund companies. Fidelity has closed four Treasury funds to new investors; Vanguard has done the same with its popular Vanguard Admiral Treasury Money Market Fund and Vanguard Treasury Money Market Fund.

The worst may be over

Still, Crane says that while additional fund closings and fee waivers are sure to come, the worst may be over because Treasury yields are starting to show ever-so-faint signs of life.

"Investors should not be scared out of cash because of low yields. In the money markets you take what the Fed gives you. You don't push the envelope because that's where accidents happen. You basically have to suck it up and realize that you're subsidizing the recovery for all those debtors!

"The other thing to keep in mind is that rates will be back. We saw a very similar period in 2003 and 2004. From 2000 to 2003 the fed funds target went from 6.5 percent to 1 percent. It stayed at 1 percent for a year and then went back up to 5.25 percent."

If you own shares of a money market fund that participates in the U.S. Treasury's Temporary Guarantee Program for Money Market Funds, then any money you had in the account as of the close of business Sept. 19, 2008, is protected if the fund fails to maintain a net asset value of $1 per share. You would be fully reimbursed under the terms of the guarantee, which is slated to expire April 30, 2009. Treasury officials will review the program at that time to decide if it should be extended until Sept. 19, 2009.

Look for the best money market rates by searching Bankrate's rate tables.