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09-18-2008, 04:38 PM
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523 posts, read 1,327,114 times
Reputation: 134
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It used to be, if you thought that market turmoil was forthcoming, you could shelter yourself by parking your money into "safe" money market funds offered in most 401k plans. Well not anymore.
Several money market funds have, for the first time, "broken the buck". Typically, a money market fund maintains a share price of $1 and pays a variable dividend (interest) on the shares. It was virtually unheard of for money market funds to lower their share price below $1. Not anymore. It's happening.
Unfortunately, the "safest" investment in most 401k plans is their "ultra conservative" money market fund. In other words, in most 401k plans, you're totally screwed. There is no place left to park your money to ride out the storm! Bye bye retirement for a lot of Americans.
Money market fund breaks the buck, freezes redemptions - MarketWatch |
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09-18-2008, 05:11 PM
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4,182 posts, read 6,014,120 times
Reputation: 1726
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Quote:
Several money market funds have, for the first time, "broken the buck". Typically, a money market fund maintains a share price of $1 and pays a variable dividend (interest) on the shares. It was virtually unheard of for money market funds to lower their share price below $1. Not anymore. It's happening.
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Several money market funds? Can you enumerate their names please? Because if I am reading the same article you linked, there's only one money market fund that "broke the buck". |
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09-18-2008, 05:12 PM
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Location: Great State of Texas
86,068 posts, read 76,606,242 times
Reputation: 27642
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If you look at the details this MM fund had $785 million in bonds issued by Lehman Bros. who just went belly up.
Not every MM is like that. Check what is the underlying investment for your MM.
If they are Treasuries then you are safe.
The higher the yield in MM, then I'd wager the underlying investment is more risky.
People need to read the fine print..you are NOT guaranteed $1 for $1 even with MM funds. If you go for the high rate then be aware WHY it's a high rate.
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09-18-2008, 05:15 PM
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Location: Great State of Texas
86,068 posts, read 76,606,242 times
Reputation: 27642
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Here..I found this on Fidelity's site..this is standard jargon that people do not read:
http://personal.fidelity.com/product....cvsr?refhp=cp
(sorry it won't go to the MM page..just type in Money Market in the search box)
"An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund." |
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09-18-2008, 09:13 PM
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Location: Wouldn't you like to know?
9,114 posts, read 16,216,749 times
Reputation: 3705
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Quote:
Originally Posted by mojo_1979
There is no place left to park your money to ride out the storm! Bye bye retirement for a lot of Americans.
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Obviously the people your talking about do not know investing 101.
If you have to draw 100% of your 401k money tomorrow, then I guess your in some do-do, however if you have the power of time, and you are diverisified to your risk tolerance, this is just "noise" your talking about....
no big deal |
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09-18-2008, 09:50 PM
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1,788 posts, read 3,645,298 times
Reputation: 1048
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Muni and treasure bonds are tanking too. We are all pretty much screwed any way you look at it. And the best part? All the cronies at the top are keeping their jobs and golden parachutes, why we, the tax payers are left paying for it all!
Time for another Boston Tea Party I would say! They stole from us all and now they want us to pay for it so they can keep thiers! Pure BS
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09-18-2008, 10:11 PM
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Location: Sputnik Planitia
6,894 posts, read 9,672,195 times
Reputation: 7598
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I have my money in cash, unfortunately with the latest government actions I am losing with that as well because the currency is soon going to lost a ton of it's value... I rolled over my 401k to an IRA fortunately and did not reinvest otherwise my portfolio would've been down over 30%, but those that are locked into 401k have limited options indeed!
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07-27-2011, 02:37 PM
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85,281 posts, read 82,805,210 times
Reputation: 61049
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Quote:
Originally Posted by ndfmnlf
Several money market funds? Can you enumerate their names please? Because if I am reading the same article you linked, there's only one money market fund that "broke the buck".
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i was the proud owner of that money market too. i lost about 2 cents on the dollar but it took about a year until i was paid pretty much in full. |
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07-27-2011, 03:27 PM
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Location: Pennsylvania
5,726 posts, read 10,547,354 times
Reputation: 9767
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I love reading these old posts. I left a job in August 2008 and haven't touched the retirement fund I left there. It's now up over 55% since then.
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