Beware of any ads for “best money market interest rates”. The truth is, the dollar is falling, and the money market is suffering as a result. This means that the price is dropping below $1 per share in some market funds. Since these types of funds involve short-term trading, if you buy shares now your money might be at risk.

Low interest rates are low for a reason – people are desperate to sell their shares. They want out. Since they want out, why would you want in? Many people make the mistake of putting too much trust into the government. They think that just because they put money into government-sponsored markets that their investment will be kept safe.

Sadly, this isn’t the case.

No, the United States government probably isn’t going to default anytime soon (meaning the next week or so, after that, the odds increase dramatically!), but when the dollar is falling, it’s a good idea to hold onto your money. Nothing is certain in an economy during a recession. You can’t trust anyone, especially when they try to promise you the best money market interest rates.

If the big bank and business bail outs over the past few years have taught us anything, it’s this: the big wigs are making poor decisions with money and aren’t being taught a lesson. And, of course, we can’t forget about fraud. Fraud even happens in at the top levels of the business and banking, at the best performing mutual funds, and in the best yielding fixed income mutual funds. Enron and Worldcom taught us as much.

A recent example proves that money market frauds happen even at state levels. The SEC has just taken action against New Jersey for fraudulent practices. Between 2001 and 2007, New Jersey sold more than $25 billion municipal bonds. The SEC alleges that during that time period, the state gave the impression that the funds involved were “adequately funded” when they actually were not. Thus, New Jersey is being accused of misrepresentation in the money market.

If an entire state can’t keep its promise regarding the best money market interest rates, who can you trust? How do you know if the funds in which you put your money are adequately funded and in good standing? Are the best rated money market funds really as safe as the ratings would suggest?

Even if you’re an experienced and knowledgeable investor, you can’t always know for certain.

When it comes down to it, no company has a real interest in being generous. Even if they do promise to offer the best money market interest rates, they will still get their money somehow. They will get their money by slashing other funds if they have to. Somebody, somewhere, will suffer.

Many investors have turned to bond investments in recent months, believing bonds to be a safe place to put their money. This is turning out to be a risky endeavor as well, and the SEC charge against NJ is only one example. With these, there is a risk of hiking interest rates and inflation. Bond portfolio managers are reporting that they are receiving more money from clients than they know what to do with.

To conclude, no investment is without risk, and the money market is no exception. If you’re promised the best money market interest rates, you need to realize that there is always a catch. If an investment sounds too good to be true, it probably is.