“The Old Grey Mare, she ain’t what she used to be,” and neither are Money Market Funds (MMFs), sometimes referred to as Money Market Mutual Funds.
MMFs used to be considered a low-risk investment, along the lines of a passbook savings account or certificate of deposit, with the opportunity to earn a higher interest yield. But that was before new regulations altered the net asset value, set up new structured fees and assessed liquidation rules.
Regulated under the Investment Company Act of 1940, MMFs were once considered safe and were highly valued by investors who wanted security but needed liquidity.
Then there was a run on MMFs, which occurred during the 2008 recession. This gave the Securities and Exchange Commission (SEC) a rationale to step in and issue new rules.
In 2014, these new SEC rules went into effect and, obviously, other complications developed.
1) The net asset value on MMFs became flexible instead of fixed. This allows your principle invested to be at risk whereas before your principle was secure and guaranteed.
2)Trigger levels were set regarding asset liquidity. If weekly assets levels fall below 10% of total value, a 1% fee is now charged. If total assets levels fall below 30% of total value then a 2% fee is now assessed. This again exposes investors and their principle undesirably and can create a negative earnings rate on the investment.
3) Funds can now be frozen for 10-full business days in any fixed 90-day period. This means that your funds can legally be inaccessible to you for nearly 40% of the time! So much for the freedom to fully and easily access your money, a one-time basic fundamental of MMFs.
Do you still value low-risk, higher interest earnings and liquidity than your passbook savings or certificates of deposit provide? There is still a sure way to avail yourself of all these guarantees. Look no further. Contact our office and we can help you attain the security you are looking for along with higher interest yields you desire, without sacrificing the liquidity you need. Because even though “The Old Grey Mare, ain’t what she used to be”, it doesn’t mean your hard-earned savings and investments need to be subjected to greater risk.