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Old 03-17-2008, 12:13 PM
 
Location: Dallas Texas
163 posts, read 874,486 times
Reputation: 144

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I have a good chunk of change invested in a money market fund; Fidelity Cash Reserves. I know these are not FDIC insured, but I've read that they are extremely safe, and that in the history of money market funds, there has never been a single instance of a fund "busting the buck", and losing money.

Technically, some have lost a little money, but the banks kicked in enough to keep it at 1$, because they knew there would be anarchy if they let it drop.

With the current economic situation, I'm getting nervous. Sure these funds may not have ever lost money before, but there's a first time for everything. The banks can only keep it at $1 for so long.

How do you all feel about this...comments...opinions please?
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Old 03-17-2008, 12:24 PM
 
2,775 posts, read 3,253,190 times
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Money market funds are a safe place to put your money right now. Your rate of return may lag behind the rate of inflation, but overall at least for this snapshot in time they look like a better place to put your money than the stock market. Especially if you're primarily concerned about short-term preservation of your savings.
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Old 03-17-2008, 01:00 PM
 
116 posts, read 412,838 times
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Default Money Market Mutual Funds are not safe

Money market funds through a bank are FDIC Insured. But money market mutual funds through a brokerage (like Fidelity or TD Ameritrade) are not. I suspect that as the financial system starts to melt down the next thing to crash will be the Money Market Mutual Fund.
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Old 03-17-2008, 02:24 PM
 
Location: The Pacific NW.
879 posts, read 1,832,174 times
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Quote:
Originally Posted by politically_correct View Post
Money market funds through a bank are FDIC Insured. But money market mutual funds through a brokerage (like Fidelity or TD Ameritrade) are not.
People tend to confuse money market FUNDS (MMFs) with money market ACCOUNTS (MMAs). They're two different things. MMFs are not FDIC insured, even if bought through a bank. Yes, some banks now offer MMFs, just as some offer stocks and mutual funds, but these are not deposit accounts and are not FDIC-insured.

MMAs, on the other hand, are deposit accounts, are FDIC-insured and are typically what's offered at banks.

As to the original question, I believe the safest MMFs will generally be the ones holding the smallest percentage of SIVs containing subprime mortgages.
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Old 03-17-2008, 03:19 PM
 
Location: Dallas Texas
163 posts, read 874,486 times
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Quote:
Originally Posted by LongArm View Post
People tend to confuse money market FUNDS (MMFs) with money market ACCOUNTS (MMAs). They're two different things. MMFs are not FDIC insured, even if bought through a bank. Yes, some banks now offer MMFs, just as some offer stocks and mutual funds, but these are not deposit accounts and are not FDIC-insured.

MMAs, on the other hand, are deposit accounts, are FDIC-insured and are typically what's offered at banks.

As to the original question, I believe the safest MMFs will generally be the ones holding the smallest percentage of SIVs containing subprime mortgages.
My bank has a MMA which is currently at 4%...right on par with Fidelity's MMF. So best I can tell, it seems like I may as well move the money into the bank MMA...it's the same rate, but FDIC insured.

Am I missing something here, or is this pretty much a no-brainer?
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Old 03-17-2008, 06:51 PM
 
252 posts, read 318,023 times
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Quote:
Originally Posted by bigdummy View Post
My bank has a MMA which is currently at 4%...right on par with Fidelity's MMF. So best I can tell, it seems like I may as well move the money into the bank MMA...it's the same rate, but FDIC insured.

Am I missing something here, or is this pretty much a no-brainer?
I went with FDIC insured!--More important than ever. I also went with a bank with a local branch with-in walking distance, lol!
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Old 03-18-2008, 10:13 AM
 
Location: in my imagination
11,942 posts, read 19,387,741 times
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Money market and CD accounts are falling in percentage given for interest.6 months ago I was gaining 5% on a CD,now it's around 3% and if it drops even more it will be to a point that money won't gain interest at all and then I don't know what I'll do,maybe just buy a house cash at that point even though I don't want to own again right now.
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Old 03-18-2008, 12:40 PM
 
Location: Bayside, NY
823 posts, read 3,474,806 times
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I have a lot of money in a Vanguard money market fund. I wouldn't worry about the security of MMFs with a Fidelity or Vanguard.
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Old 03-21-2008, 10:03 AM
 
Location: Riverhead, NY
10 posts, read 70,291 times
Reputation: 11
Quote:
Originally Posted by bigdummy View Post
I have a good chunk of change invested in a money market fund; Fidelity Cash Reserves. I know these are not FDIC insured, but I've read that they are extremely safe, and that in the history of money market funds, there has never been a single instance of a fund "busting the buck", and losing money.

Technically, some have lost a little money, but the banks kicked in enough to keep it at 1$, because they knew there would be anarchy if they let it drop.

With the current economic situation, I'm getting nervous. Sure these funds may not have ever lost money before, but there's a first time for everything. The banks can only keep it at $1 for so long.

How do you all feel about this...comments...opinions please?
this is exactly why I am liquidating mine through MassMutual. When you refer to "banks" here, you really mean in your case - Fidelity, in my case - MassMutual. The parent company kicks in any loss to keep the share price at $1.00. This is what worries me - they are NOT REQUIRED to do so...what do you think will happen if Fidelity unwinds and finds itself deep in the red with mortgage backed securities???
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Old 03-21-2008, 10:04 AM
 
Location: Riverhead, NY
10 posts, read 70,291 times
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Quote:
Originally Posted by htmlfamily View Post
I went with FDIC insured!--More important than ever. I also went with a bank with a local branch with-in walking distance, lol!

Funny...but, me too!
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