Vanguard Cash Reserves Federal Money Market Fund (IRA, brokerage, FDIC)

[jasperhobbs]

Vanguard will be transitioning to government backed securities and cash and going away from commercial paper which does have some risks. My question is are money market accounts that unsafe as I am with Fidelity and have concerns?


https://www.cnbc.com/2020/08/27/vang...vestments.html

[mathjak107]

Originally Posted by jasperhobbs

Vanguard will be transitioning to government backed securities and cash and going away from commercial paper which does have some risks. My question is are money market accounts that unsafe as I am with Fidelity and have concerns?


https://www.cnbc.com/2020/08/27/vang...vestments.html

They made changes in the money markets back after 2008 .....

All money markets today are pretty safe and restricted in what they can buy .....

I only use t- bill money markets from fidelity ......there is nothing safer.

Vanguard had closed all the treasury money markets to new money ...so now they are going to add more treasuries to the regular money market .

Fidelity still has some treasury funds open..the pure ones that don’t do repos are closed to new money

[jasperhobbs]

Originally Posted by mathjak107

They made changes in the money markets back after 2008 .....

All money markets today are pretty safe and restricted in what they can buy .....

I only use t- bill money markets from fidelity ......there is nothing safer.

Vanguard had closed all the treasury money markets to new money ...so now they are going to add more treasuries to the regular money market .

Fidelity still has some treasury funds open..the pure ones that don’t do repos are closed to new money

Thanks, I feel pretty safe with Fidelity. I am in the SPAXX fund, is there a better one that is open?

[jiminnm]

Originally Posted by jasperhobbs

Thanks, I feel pretty safe with Fidelity. I am in the SPAXX fund, is there a better one that is open?

That's the core account in our standard brokerage account at Fidelity. We're happy with it.

[mathjak107]

Originally Posted by jasperhobbs

Thanks, I feel pretty safe with Fidelity. I am in the SPAXX fund, is there a better one that is open?

The safest is the treasury funds ....the safest one is closed but fzfxx is open

[GWoodle]

Originally Posted by jasperhobbs

Vanguard will be transitioning to government backed securities and cash and going away from commercial paper which does have some risks. My question is are money market accounts that unsafe as I am with Fidelity and have concerns?


https://www.cnbc.com/2020/08/27/vang...vestments.html

My T Rowe Price find did this in 2008. In normal times you get about the interest of T-bills. In today's market lucky to have 0.01%. The fund is allowed to borrow from the Fed to keep the $1.00 NAV. For the fund to do this they are required to have Government Money. When the fund converts they may also lower fees, lower account minimums, other items (paperless statements). I'd watch if Fidelity does the same thing. They may offer both a Government Money and Private Money accounts.

It would appear the only guaranty that works is something tied into the Federal Reserve or the Treasury.

[mathjak107]

i hold the distinction of actually losing money in a money market in 2008 ... we not only lost 2-3% but were locked out for months .

because i run a bullet proof portfolio via the permanent portfolio it calls for only treasuries to be used .

so while i use fidelitys treasury money market as a core , i keep the bulk in the now closed money market fdlxx and transfer to the core as needed .


the difference is fdlxx is pure t-bills . no other gov't paper and no repos .

they got so much money in march they closed it to new investors .

the other treasury money market is only up to 80% t -BILL and it engages in repos .

the 100% t-bill fund is not taxed by ny or nyc .

[jasperhobbs]

Originally Posted by mathjak107

i hold the distinction of actually losing money in a money market in 2008 ... we not only lost 2-3% but were locked out for months .

because i run a bullet proof portfolio via the permanent portfolio it calls for only treasuries to be used .

so while i use fidelitys treasury money market as a core , i keep the bulk in the now closed money market fdlxx and transfer to the core as needed .


the difference is fdlxx is pure t-bills . no other gov't paper and no repos .

they got so much money in march they closed it to new investors .

the other treasury money market is only up to 80% t -BILL and it engages in repos .

the 100% t-bill fund is not taxed by ny or nyc .

Did you permanently lose 2-3% or just temporarily until things settled down?

[mathjak107]

Originally Posted by jasperhobbs

Did you permanently lose 2-3% or just temporarily until things settled down?

gone forever ...

money markets have no guarantee to stay a buck .

right now fund families are cutting expenses to preserve the buck as the actual returns with the costs are negative .

[jasperhobbs]

Originally Posted by mathjak107

gone forever ...

money markets have no guarantee to stay a buck .

right now fund families are cutting expenses to preserve the buck as the actual returns with the costs are negative .

I wonder if local banks and FDIC insured savings accounts are a safer way to go nowadays with money in IRA accounts.