How safe are Moneymarket Funds?

The Washington Post recently published some interesting comments quoted from Mary Shapiro who just happens to be the Chairman of the Securities and Exchange Commission (SEC). Many people park funds in these Moneymarket accounts believing that they are both Safe and Liquid.
Just how Safe are they?
Remember What happened in 2008 when Primary Reserve Fund share prices fell below $1.00
you could Google it or search newspaper archives. Students of history suggest that History repeats itself

Mary was quoted as saying - investors "have been given a false sense of security"
"Funds remain vulnerable to the reality that a single moneymarket fund fund breaking the buck could trigger a broad and destabilizing run"
She went on to say that in a crunch investors may face limits on withdrawals

I am not telling anyone to buy or not to buy these products.
I just found the comments by Mary to be extremely interesting and maybe even a little bit unsettling!
What do you think??

There are financial products available that have no market risk. There are other financial products that include various amounts of market risk. Understand what you are buying! Everyone needs to understand the diference between what I like to call Safe Money and Risk Money. For most people there needs to be a combination of both! What is your comfort level between the two?

I believe it was Wil Rogers the intellectual cowboy who once said "I'm more concerned with the return of my money, than the return on my money"

Your Retirement Assets

In our last post we talked about the concept of Retirement assets with a different liquidity requirement or need date. I like my clients to think about pots of money or buckets. Some of the conceptual buckets are like a pile of cash in your wallet, others are like money in a checking or savings account. Still others are like money in a short term Bank CD or security. The final time bucket is for very long term needs like future house mortgage payments or college funding for your children or estate planning for caring for loved ones after your death.

As you would imagine different time of need money buckets require different financial products in order to optimize liquidity and earnings or growth potential for that particular asset pool of financial assets.

New 401 K PLan options

USA Today in an article written by Christine Dugas talked about a new proposal from the government which would add an option to include Annuities when they are ready to retire.

This really isn't news. I have been offering my 401K Plan clients the ability to do just this for several years. All of my plans include a client option to save during their working years and to handle either some of their retirement assets or all of their assets utilizing Fixed Indexed Annuity (FIA) Products when they actually do choose to retire.

All annuity products are not equal. Not all annuity products offer protection from market risk combined with lifetime income streams that a client cannot outlive. Only an independent licensed insurance professional can truly help you find the ideal Annuity Product or in many cases offer you the right combination of Annuity products that meet your strategic retirement goals. Independent agents can select the best product from multiple carriers that address different parts of your long term goals. We need money in retirement at different times and with different liquidity requirements. We will talk more about this later.