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Money market funds ?
Posted on 9/19/22 at 10:19 am
Posted on 9/19/22 at 10:19 am
Does it matter when you buy into these (as far as getting the benefits of further rate hikes by the FED)? Curious if they automatically reset to the higher rates without any hit to your "principal" price that you bought in at.
Example: The Fed is going to raise rates later this week. Should I wait to buy into money market funds until then or does it not matter?
Example: The Fed is going to raise rates later this week. Should I wait to buy into money market funds until then or does it not matter?
Posted on 9/19/22 at 10:20 am to GeneralLee
Not like bonds. They down depreciate from interest rate moves.
But they can get hit during liquidity crunches.
Generally, extremely safe places to hide out without any guarantees.
But they can get hit during liquidity crunches.
Generally, extremely safe places to hide out without any guarantees.
Posted on 9/19/22 at 10:26 am to GeneralLee
quote:
The Fed is going to raise rates later this week. Should I wait to buy into money market funds until then or does it not matter?
If you’re talking about true money market mutual funds then it doesn’t matter at all. You get a daily accrual, and while the rate won’t go up identically to the Fed raise instantaneously, it will get there in time. There is no advantage to waiting on money market mutual funds.
Posted on 9/19/22 at 10:31 am to slackster
Thanks this is very helpful.
My parents have an investment account with a large bond allocation, unfortunately, with some funds in there like BND that are down >10% YTD. Curious if it would make sense to just take the hit on those and reallocate to money market funds to avoid continued principal risk.
My parents have an investment account with a large bond allocation, unfortunately, with some funds in there like BND that are down >10% YTD. Curious if it would make sense to just take the hit on those and reallocate to money market funds to avoid continued principal risk.
Posted on 9/19/22 at 10:36 am to GeneralLee
quote:
My parents have an investment account with a large bond allocation, unfortunately, with some funds in there like BND that are down >10% YTD. Curious if it would make sense to just take the hit on those and reallocate to money market funds to avoid continued principal risk.
It seems a little over reactionary to sell BND now. I know this board seems to think rates are going to 10%, but taking on some duration will be a good idea in the very near future, and it may be there already.
Perhaps they’d be better off buying individual bonds that are easier to understand than a bond fund? Getting 4-6% with a defined maturity date makes it a little easier to stomach the price movements along the way.
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