One unfortunate result of the Fed's attempts at economic stimulus is the ever-lowering rates of interest offered by money market funds. How low? Today even most Vanguard money market funds yield under 2% TAXABLE (higher fee funds yield even less). Apparently the Federal Reserve is more concerned with encouraging borrowing (and why not, it has worked so well in the past...) and supporting asset bubbles and speculators in higher risk investments than looking out for the few, the proud, the low-risk money savers.

What's a guy to do? While those with millions of dollars to park are basically hosed, small investors can find some great teaser deals in FDIC-insured bank products. An article. by Laura Bruce for Bankrate.com notes some of the best:

To play the game right, be prepared to move on to the next teaser when yours expires (though some of these companies have decent deals even after the teaser period ends). Not worth the effort? Perhaps, but just think about how much time you spent finding the best deal on your T.V.

LINK

Bankrate.com says that after you're done throwing open the windows and airing out the wintry must, you should turn your attention to spring cleaning your money. No, they are not talking about laundering ill-gotten cash.

They suggest five financial areas that could probably use a good dusting, tell you exactly how to get started, and about how much time and money you'll have to devote to each:

Banking: Consolidate accounts, streamline with online statements and bill pay, toss old statements and checks.

Credit cards/debt: Check your credit report, shop around for lower interest rates, and come up with a payment strategy.

Estate planning: Create or update a will or trust; consider a living will and financial power of attorney; toss old documents.

Retirement accounts and investments: Consolidate accounts, rebalance and update beneficiaries.

Insurance: Get new quotes for car, home and life insurance policies; update beneficiaries.

Here's one Bankrate.com left off the list: review your mutual fund portfolio, and if your allocations are significantly out of whack, rebalance!

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The current financial turmoil has lead to a series of unfortunate events for investors looking for safe yield. To bail out a sliding economy and housing market, the Federal Reserve is lowering interest rates to rock bottom levels, which shrinks yields paid by money market funds, CDs, and short-term bond funds. Panicked investors have bought government bonds down to pathetically low yields - 3.5% on the ten year, far less on shorter maturities. To make matters worse, these yields, after tax, are below the rate of inflation. This leaves the yield hungry between a rock and a hard place (and rock prices are rising).

A BusinessWeek article notes some options:

1. Stay Away from Treasuries
2. Look at Muni Bonds, Despite the Bond Insurer Crisis
3. Inflation Is Hard to Beat [TIPS are overpriced]
4. "Mortgage" Isn't Always a Dirty Word
5. Corporate Debt Can Offer Good Returns—But Beware

We'd add that investors might have to take on even more risk. Funds that write covered calls can generate attractive yields, albeit with far more risk than most bond funds but less than ordinary stock funds. High yield (junk) bond funds like Vanguard High-Yield Corporate (VWEHX) yield about 8.6%, now rewarding investors quite a bit more than safe debt yields for the heightened risk (even though such funds have 20% downside risk in a bad market for low-grade debt). Even stock index funds are looking attractive (thought with much higher risks than most bond funds) given the 2.37% yield on the S&P 500, which actually beats some bonds adjusting for the tax break on dividend yield. One strategy could be to start buying these higher risk / higher yield funds now with a relatively small portion of your portfolio, and if the credit markets and economy worsen, increase your stake further.

Be warned that reaching for extra yield can be dangerous (as all the hedge funds and other investment partnerships buying mortgage debt with leverage are finding out). Of course long haul, earning less than inflation is dangerous as well.

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Hate the investment options in your 401(k) plan? Old enough to remember watching the Beatles on Ed Sullivan? Forbes reports on 401(k) "in-service" distributions, an obscure provision that allows 401(k) investors who are 59 1/2 and older to roll over some or all of their 401(k) assets into an individual retirement account without paying taxes or penalties:

Employers and 401(k) plan administrators don't advertise this fact, but most workers 59 1/2 and older, and even some younger ones, can roll over 401(k) funds while they're still working and contributing to the plan. This option isn't right for everyone. But in some cases it can provide more attractive investment choices, a better way to leave money to your kids or even a chance (new in 2008) to move 401(k) dollars directly into a Roth IRA.

The law allows workers to empty their 401(k) accounts once they hit 59 1/2. They can roll all the money into an IRA without paying tax now. Or they can take cash out, pay any ordinary income taxes due and spend what's left. The same goes for participants in government and not-for-profit savings plans similar to 401(k)s."

As the article mentions, employers can refuse to allow these early 401(k) exits, but "in-service" distributions are currently available at 70% of U.S. companies. As we well know by reviewing billions of 401(k)s for the MAXadvisor 401(k) Planner service, there are a lot of lousy company-sponsored retirement programs out there. "In-service" distributions are a great way to escape a plan that offers a mixed bag of low-quality or expensive 401(k) investment options.

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Mutual funds are required by the SEC to deliver an annual report report to shareholders each year, usually right around now. Think of these - the semi-annual and annual reports - as your fund's twice-a-year report card - it's very important (albeit tedious) to read through the annual report carefully to find out what your fund manager has been up to in the past year. In it you'll find crucial information including detailed performance data, asset level changes, changes in holdings and strategies, and pent-up tax liabilities. Chuck Jaffe tells you exactly what to look for when your mutual fund's annual report lands in your mailbox. Here are the highlights:

Performance - Find out why the fund has beaten or lagged its benchmarks.

Statements from Management - Funds should provide candid, clear explanations of what happened, what to expect and why.

The Fund's Portfolio - Look for a portfolio that is consistent with your expectations in terms of diversification, international exposure and size of companies.

Expenses and Portfolio Turnover - A fund with high or rising expense ratios is not maximizing your returns. High turnover can lead to big capital gains tax liabilities, which you end up paying.

Asset Growth - That's one investment trend that, eventually, you may want to follow.

The Auditor's Report - Don't bother reading it, just count the paragraphs. If there are more than three, there could be trouble.

Changes in Structure - while many issues are boilerplate and legalese, some proxies seek your approval for dramatic changes in style and strategy.

Taxable Gains - A fund that is tax inefficient - where the bulk of its returns come from trading profits and dividends rather than long-term buy-and-hold investing - forces an investor to pay taxes for big chunks of their gains annually.

Some managers write generic boilerplate but some write interesting commentary that really gives you some insight into the past, current, and future goings on in the portfolios. Much of the fund data in annual reports finds its way onto the MAXfunds.com fund data pages (be sure to check the 'details' links), often with our custom interpretative statistics.