Lesson 3: Reaching for yield can fail
lessons from the crash pile of cash

January 11, 2010: When stocks fall, the stability of cash can cushion the blow. Yet things don't necessarily work out that way.

Just ask shareholders of Schwab YieldPlus. This so-called ultrashort bond fund -- which was marketed as a cash alternative, though it really wasn't one -- fell 35% in 2008 when the mortgage securities that provided the "plus" in the fund's name turned out to be riskier than thought. (Schwab settled the charges in January 2011 but did not admit wrongdoing.)

Before that, there was the Reserve Fund, the first money fund in 14 years to lose value in part because it tried to boost payouts by holding some Lehman debt.

It makes no sense to take risks with your rainy-day savings, a lesson that's worth remembering today. Since early 2009, investors have poured $73 billion into floating-rate bond funds, which buy short bank loans that offer higher payouts than basic cash. And $33 billion has gone back into ultrashort bond funds.

More takeaways from 2010

May 6:The Dow mysteriously drops 1,000 points in a "flash crash" blamed on computer trading models. The moral: Rapid-fire programmed trading is yet another reason individuals should just stick with buy and hold.

December 31: Fidelity reports average 401(k) balances have recovered from the financial crisis. The moral: Between December 2007 and December 2010, 401(k) balances rose about 1% annually, while stocks lost close to 3% a year -- proving that saving is your most reliable retirement planning tool.

Related: How much do I need to retire?

  @Money - Last updated September 03 2013 05:24 PM ET
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