http://www.thesunsfinancialdiary.com/investing/money-market-funds-may-not-be-as-safe-as-you-think/ Fri, 03 Feb 2012 17:42:24 +0000 hourly 1 http://wordpress.org/?v=3.3.1 http://www.thesunsfinancialdiary.com/investing/money-market-funds-may-not-be-as-safe-as-you-think/#comment-44493 Andy Thu, 25 Sep 2008 20:45:19 +0000 http://www.thesunsfinancialdiary.com/?p=2515#comment-44493 I decided today that I wanted to fully protect my cash funds and as a result have decided to move them from my Vanguard prime money market account to my online ING Direct savings account. Why? because first money market accounts at Vanguard, Fidelity and other large cap institutions are for the most part not FDIC insured and in these bizarre financial times even the most well know institutions can collapse and leave depositors with pennies in the dollar. Secondly, and as importantly from an investments perspective the yields on money market accounts have dropped so low because of tightening credit that Vanguard's money market fund (an industry leader) is now only paying a 2.25% APY (was 3.5% just a few months ago), whereas at ING Direct (see review) I can get 3% and even more at HSBC. So even taking out the FDIC insurance argument, as a straight investment decision on-line savings accounts are a better investment than most money market funds at the current time. I decided today that I wanted to fully protect my cash funds and as a result have decided to move them from my Vanguard prime money market account to my online ING Direct savings account. Why? because first money market accounts at Vanguard, Fidelity and other large cap institutions are for the most part not FDIC insured and in these bizarre financial times even the most well know institutions can collapse and leave depositors with pennies in the dollar. Secondly, and as importantly from an investments perspective the yields on money market accounts have dropped so low because of tightening credit that Vanguard’s money market fund (an industry leader) is now only paying a 2.25% APY (was 3.5% just a few months ago), whereas at ING Direct (see review) I can get 3% and even more at HSBC. So even taking out the FDIC insurance argument, as a straight investment decision on-line savings accounts are a better investment than most money market funds at the current time.

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