sewhappy

Okay - some smart folks on here. I've printed out your posts and will keep reading them until my brain starts to grasp this stuff.

Notice the market is UP today - which, of course, makes me just want to relax and assume all will be fine . . . what's with that crazy Citi? Who would have thought they'd lead the bulls?

crescent22

Perceptions change fast when it's about the macro. Today's perception can change too. We're still staring at a GM problem coming to head in the next few weeks. Citi can make money simply by not having many writeoffs for 1 quarter - they sit there and make some fees and net interest for 3 months. Doesn't mean it's over.

anothermom2

If you are concerned about your 401k funds, if you have a fund that did not lose an astounding amount of principal (as most did) since sept., you might switch to a treasury security based type fund at your 401k plan. Different companies call the things differently but treasury money market might be in the name. As someone said above, you need to read the prospectus, because even the us treasury mm fund may have only 80% or some other # in treasuries.

I get nervous too. It is hard not to. You have no control over where the thing is going, and everything you thought was safe seems to be a bit shaky. I do not know if there are any real answers out there. Keep on top of what you have and what they are doing to manage it. Best of luck to all.

sewhappy

It is not reassuring to start delving into what the so called "guaranteed" funds actually are. Our guaranteed growth fund (which earned 4.8 percent in 2008) is comprised of mortgages, corporate bonds, about 10 percent treasuries - and is all packaged inside an "insurance wrapper" provided by . . . you guessed it . . . AIG!

Also, learned just yesterday that money market funds are NOT FDIC secured. Only accounts in banks. Am I the only ignorant out there who thought money market funds were insured?

crescent22

Because of the crisis, they are guaranteed short-term through the Treasury Temporary Guarantee Program for Money Market Funds- lasting through 12/31/09 if not extended. Your fund must sign-up for the program for it to apply. Only balances as of 9/19/08 are guaranteed.

But you are otherwise correct. As a matter of normalness, money market funds do not have the FDIC guarantee. They are not bank balances subject to the solvency of a bank.

BCEagle91

I guess you benefit from the continual AIG bailouts then.

sewhappy

Ok then I guess I'm for all this junk going on until I can figure out where to go with our dollars. Not that we're talking a huge amount, mind you . . . Just what we have.

tega

There is a possibility of higher inflation down the line (when the economy starts performing better, it is not a problem now) because of all the money that has been pumped into the financial system. (Bernake claims the FED has a plan to deal with this, but I don't really trust them). If you have a longer time investment horizon(over 5 years), you might want to take a look at Treasury Inflation-Protected Securities (TIPS). They are not good if you have a short horizon because inflation is low right now.

You get coupon payments based on the inflation adjusted face value, and you always get the face value in case of deflation, so your downside risk is protected (i.e. you are guranteed your principal back if Uncle Sam is not broke )