Money market mutual fund lifeline

"I tried to buy a 30-day T-bill and there were no offers," says Edward Gjertsen, vice president at Mack Investment Securities in Glenview, Ill.  "The rate, the annualized rate was .05 percent. I talked to a couple of (trading) desks and they said some people were paying premiums to get into a T-bill. They were losing money for the security of government paper."

Herb Hopwood, president of Hopwood Financial Services in Great Falls, Va., probably best sums up the current mindset: "What's important in this environment is return of principal, not return on principal."

Hopwood says he wants to learn more about the government's money market mutual fund guaranty program before he moves from Treasuries and government agencies back to money funds.

"The devil is in the details. We have clients with a couple million dollars in money markets. I'm keeping them in government securities for 45 days. I want to know the skeletons."

If you're still concerned about money market mutual funds, you could consider FDIC-insured alternatives. There are plenty of money market accounts offering excellent yields. In addition, high-yield CDs are also paying well and can provide a parking space for your cash for anywhere from one month to five years.