Many people park money they'll need soon in a money-market account. (Portfolio 104: Emergency Funds covers money-market funds in depth.) And for good reason: Money-market funds are pretty secure.
But investors may do better by taking on a bit more risk. Over the last five years, the average ultrashort-bond fund returned about 3.4% annually versus about 2.2% for the average taxable money-market fund. That may not seem like a lot, but compounded over a few years, it could mean the difference between flying first class to Europe and being confined to coach.
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