If you have any $ in a Money Market Fund

[morgandawn]

If you have any money in your retirement accounts or just any account that is a money market fund, pay heed: the US has changed the protections for these funds and they are no longer guaranteed to keep their value.

Traditionally money market funds are places where people can store cash. Most are tied into some form of retirement or investment

Comments

[catalenamara]

Thanks for the info. I was just thinking about a similar issue today and your post helped me make a decision.

[morgandawn]

For cash you need to access within the next year, I'd suggest a regular savings account. For CDs, only tie up the $ for 1 year - when the rates rise, you can then look at the CD laddering with longer periods.

Most of us have straightforward money needs but I know that in my old job, money market funds were the only option if you wanted to park your cash in the 401k.

[catalenamara]

Thanks again - this exactly parallels my thinking. I am very financially risk-adverse.

[morgandawn]

The best advice I've been given for those close to/about to retire is to keep a 50/50 mix = 50% cash or bonds (bonds/bond funds are best inside tax free retirement accounts) and 50% stocks/stock funds. If and when bonds/CDs can be locked in for 4-5%, move more $ into them). You need 4-5% to keep up with inflation

[morgandawn]

Thanks for the input. I recommend CD laddering for cash reserves - but for now, with rates so low, I would not lock my funds for more than one year. The bigger issue is 401ks - my old employer offered a 'Stable Value Fund' which of course meant you had to read the fine print to realize that it too had the ability to fluctuate.

What do you think of the article's suggestion to use T-Bills? We've used IBonds in the past, but Treasuries seem more mysterious.