Money Markets and the Current Financial Crisis

Jul 15, 2008 2 Replies
J

What would it take for me to start worrying about the money I put into our Fidelity Cash Reserve accounts? What kind of financial crisis would it take to affect this account and money markets in general?



I'm getting too old for this %$!&.



Thanks,



JW


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R

Several money markets collapsed last year:

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Because it was a small amount, the brokerages made whole on the initial deposits. Some invested in mortgage CDOs and auction rate securities. Read your perspectus carefully.

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

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W

I'm sure you know money market funds are NOT FDIC insured. But the risk of loss is extremely low. There have been countless articles indicating the major mutual fund companies would cover any losses (at their expense) to ensure the NAVs of their money market funds don't fall below a dollar. The theory is the loss of confidence would cause many investors to flee all their funds. I wouldn't worry.

If you feel you need the FDIC insurance, I'm sure you can find a better rate using a money market ACCOUNT at a bank (which is FDIC insured). You can find the high rates at bankrate,com.

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

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