You may need to be concerned about being able to withdraw your money from Money Market Funds during times of an economic crisis or meltdown.
The Securities and Exchange Commission (SEC) allows Money Market Funds to suspend redemption under "extraordinary circumstances".
Most all of us have some money in such a MM Fund.
In accordance with your financial planning for retirement, you may have an IRA or 401(k) and if so, you most certainly do have money in that type of fund.
As an investor, you have your money working for you in stocks, bonds and you have some sitting in a such a fund.
Such a fund is usually a "sweep account", used as a holding account for cash.
When one purchases stocks, stock funds, bonds, bond funds or other instruments, money is transferred from your sweep Money Market Fund to pay for them.
When stocks, bonds or funds are sold, the monies received from the sale are placed in your sweep account.
Most investment firms do not have a "cash" account available that is separate from a MM Fund.
The end result is that most of us do have some money in such funds.
The Securities and Exchange Commission (SEC) allows the suspension of redemptions from MM Funds under extraordinary circumstances, such as a financial crisis.
It is unclear as to how pervasive this suspension would be applied during a meltdown.
Would all such funds suspend redemption? There may be some that do not suspend, but every MM Fund has the authority to suspense redemptions.
What does that mean to an investor? It means that an investor may not be able to withdraw their own money when he/she wants to.
If you are retired and normally withdraw from your MM Fund for living expenses, then you may not be able to do so.
Even if you are not considering financial planning for retirement, you will be impacted.
If you have all of your money in stocks, and you decide to sell part of your stocks to withdraw the cash, you may not be able to so since that cash has to go through the sweep Fund.
The SEC indicates that suspending redemptions may impose hardships on investors who rely on their ability to redeem shares.
It seems like the hardships that they pushed upon the investors are completely irrelevant to the SEC.
The just want to protect the banking industry so there will not be a run on the money market accounts during a meltdown.
It looks like the investor comes last.
Investors should always communicate with their investment firms and advisors to ensure they understand financial choices.
The Securities and Exchange Commission (SEC) allows Money Market Funds to suspend redemption under "extraordinary circumstances".
Most all of us have some money in such a MM Fund.
In accordance with your financial planning for retirement, you may have an IRA or 401(k) and if so, you most certainly do have money in that type of fund.
As an investor, you have your money working for you in stocks, bonds and you have some sitting in a such a fund.
Such a fund is usually a "sweep account", used as a holding account for cash.
When one purchases stocks, stock funds, bonds, bond funds or other instruments, money is transferred from your sweep Money Market Fund to pay for them.
When stocks, bonds or funds are sold, the monies received from the sale are placed in your sweep account.
Most investment firms do not have a "cash" account available that is separate from a MM Fund.
The end result is that most of us do have some money in such funds.
The Securities and Exchange Commission (SEC) allows the suspension of redemptions from MM Funds under extraordinary circumstances, such as a financial crisis.
It is unclear as to how pervasive this suspension would be applied during a meltdown.
Would all such funds suspend redemption? There may be some that do not suspend, but every MM Fund has the authority to suspense redemptions.
What does that mean to an investor? It means that an investor may not be able to withdraw their own money when he/she wants to.
If you are retired and normally withdraw from your MM Fund for living expenses, then you may not be able to do so.
Even if you are not considering financial planning for retirement, you will be impacted.
If you have all of your money in stocks, and you decide to sell part of your stocks to withdraw the cash, you may not be able to so since that cash has to go through the sweep Fund.
The SEC indicates that suspending redemptions may impose hardships on investors who rely on their ability to redeem shares.
It seems like the hardships that they pushed upon the investors are completely irrelevant to the SEC.
The just want to protect the banking industry so there will not be a run on the money market accounts during a meltdown.
It looks like the investor comes last.
Investors should always communicate with their investment firms and advisors to ensure they understand financial choices.