Interest rates are so low (thanks to Central Bankers) that savers (and lenders) have been penalized where borrowers are being rewarded. Our savings and money markets are returning pennies as interest. When you factor in inflation and taxes we are not even treading water with these positions. We are losing money and purchasing power. Yes, these are parking places for your money. If you have plans for it, are undecided on what to do with it, are using it as an emergency pool, or just want preservation of capital (not risking or losing principal) this may be a good decision. If you want a higher return, you are being coerced to take more risk through longer maturities, credit risk, or more volatility (or risk of loss) via the stock market.
Many have been rewarded with superior returns by accepting the above-mentioned risk. The challenges for each of us is whether to trim and take some profits off of the table, rebalance our portfolio, or let it ride and hope for the best. Even by taking some profits your safe alternatives are paying so little. Historically, bonds (lending your money to government or corporations) have provided some stability (ballast, as some pro’s say) but a 2 year U.S. Treasury note is yielding 0.15% today. That translates to $150/year of interest on a $100,000 investment! Hardly inspiring. At least you get your money back in 2 years from the U.S. Treasury! If the Federal Reserve begins to raise interest rates (due to inflation or improved economy) then you will begin to see higher CD and bond returns on the short end. The challenging decision for each of us is how long will you wait for this to happen?