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Is Your Money Safe? Know What You Own

Posted Sep 18, 2008 01:01pm EDT by Aaron Task in Investing, Recession, Banking

Updated from 1:01 p.m. EDT 

Money market funds have long been considered a safe haven for investors. It was a place to park cash and sleep soundly at night. Not anymore. Managers of the $65 billion Reserve Primary Fund stopped redemptions on Tuesday -- meaning its investors could not get their cash -- a fresh sign of the crisis gripping Wall Street and the global markets. (For more on the Reserve Primary story, check out Kevin Depew's take at Minyanville.com.)

More pain emerged today as Putnam closed its $12.3 billion Putnam Prime Money Market Fund and Bank of NY Mellon said its $22 billion BNY Institutional Cash Reserves fund's value had fallen below the key $1 per share level. Both funds were designed for institutional investors.

Meanwhile, State Street felt compelled to put out a statement declaring its money market funds "remain well capitalized with ample sources of liquidity,"  denying rumors their net asset value had dropped below $1.

So how do you know if your cash is safe?

First, note the distinction between a money market fund and a money market deposit account at a bank. A money market fund is essentially a mutual fund and is not insured by the FDIC. In contrast, a bank money market deposit account is FDIC insured up to $100,000, and up to $250,000 for some retirement accounts.

Here are additional resources to investigate if your money is insured:

The National Credit Union Administration also features online resources for consumers. Credit union individual accounts are insured up to $100,000 by the National Credit Union Share Insurance Fund. Credit union retirement accounts are insured up to $250,000, according to Kiplinger.com.

Bottom line: In these troubled times, you are your own best financial planner. Ask questions until you're satisfied you know what you own.

38 Comments

Yahoo! Finance User
Yahoo! Finance User - Thursday September 18, 2008 01:04PM EDT

FDIC's are stable or else there would be big trouble...

Ruth Ann
Ruth Ann - Thursday September 18, 2008 01:12PM EDT

how safe are cd accts

Yahoo! Finance User
Yahoo! Finance User - Thursday September 18, 2008 01:20PM EDT

Don't be so certain. FDIC is totally underfunded. In fact, reserves are below the minimum set by Congress. Congrees needs to fund the FDIC, but what's another 50 billion here or another 50 billion there?

__A_YAHOO_USER__
__A_YAHOO_USER__ - Thursday September 18, 2008 01:48PM EDT

shouldn't we consider a 'real' communist government? if with 'good' leaders (always promised by democrature) what would be the problem? one thing for sure: greed is no good!

chris
chris - Thursday September 18, 2008 02:03PM EDT

And so castles made of sand fall in the sea...eventually.

NCDodgerBlue
NCDodgerBlue - Thursday September 18, 2008 02:05PM EDT

The government keeps "pumping" billions into the "Financial System". Where exaclty is this money going and how is it being used?

Twentynine
Twentynine - Thursday September 18, 2008 02:07PM EDT

This is a market correction. It's been overdue. Do you remember the savings and loan bailout in the 1980? Soon afterward the market had one of the biggest rallies of alltime. Sit tight for a year or so. And then hold on!

COUSCOUS
COUSCOUS - Thursday September 18, 2008 02:13PM EDT

GOOD PREFERREDS STILL HAVE GOOD YIELDS SO WHAT IF THEY FLUCTUATE,,,THE LOSS IS INCURRED OLY IF U PANIC AND ,SELL

Yahoo! Finance User
Yahoo! Finance User - Thursday September 18, 2008 02:31PM EDT

FDIC = NEARLY BROKE LOL

LORI
LORI - Thursday September 18, 2008 02:41PM EDT

There are some many hard working Americans struggling right now; is the government going to bail all of them out of their mortgages that are being foreclosed upon? Why is it that any financial problems faced by your average Joes is all their own fault for "over-extending" or living beyond their means but the filthy rich corporate entities are the ones that the Government jumps to rescue? Are they worried that AIG will have to do business from a cardboard box in the alley next to the homeless people that they created with their "over-extending" and shady dealings? We trust the Government to protect us as citizens but it seems all they protect is their pockets. Are you as happy as I am to be living the American Nightmare? I've worked hard all my life and the small retirement fund I have is growing smaller by the minute. Nevermind the fact that I have to work another 30 years before I am legal retirement age and of course I have to pay in to Social Security during the next 30 years as well. But, by the Government's estimate, I will not be able to collect a single penny of the money that I have paid in (since I was sixteen years old) because the well is going to be all dried up by the time I'm eligble to collect. God Bless America (but not the Americans that make up America-just the Government and the Corporate cronies!)

david
david - Thursday September 18, 2008 02:43PM EDT

hang in there-you will make money

RussellM
RussellM - Thursday September 18, 2008 02:44PM EDT

Financial security? If the Middle East or China wanted to topple the US, now would be the time. If they dump their T-bills, the dollar would plunge and we would all be broke. We will reap the whirlwind by replacing the gold standard with the Federal Reserve Note. Where is this money coming from that the Fed is bailing out failing businesses with? They are printing it, further devalueing our "dollar". Eventually our "dollars" will be as worthless as a stock note from a Enron.

- Thursday September 18, 2008 02:46PM EDT

There is so much emotion floating around and people are making things worse by being in PANIC mode. Let they system work. This too shall pass. If it doesn't, we are all in deep yogurt. Selling stocks now doesn't help a person's situation. Granted, there are some that are awful, but I suspect the majority of stocks are still a reflection of a well managed company and the fundamentals of that company are still good.

Yahoo! Finance User
Yahoo! Finance User - Thursday September 18, 2008 03:02PM EDT

The money all these guys have been using to "play the markets, was not money they actually had. It was money they borrowed. That's called "Leveraging" or using "Other People's Money". The reason the stock market had run up 1400 percent from 1980 was because there was a progressively increasing amount of leveraging going on to the point where leveraging was at 40 to 1. For every 40 dollars "floating the market" or really just keeping it "artificially inflated" there was just $1 of real collateral backing that dollar. It has been a dead "Golden Calf" all you fools have been greedily worshipping thinking "I'm making money while I sleep" or my "money is safe in the marketplace". Really what you have been worshipping is an artificially pumped up baloon of "The Golden Calf" that is now deflating. The money from the government is a desperate manipulation attempt by the government to keep all the ignorant sheeple believing the big lie that everything is A-okay to persuade voters to vote GOP. Despite what the song says, you are all getting "fooled again". It's all just a big game of borrowing from Peter to pay Paul and robbing from Luke to pay Peter. Except YOU are Luke!!!! Paul is the "fat cats" of the rich elite that are wanting that you all just become another slave to the New World Order, while they acquire and control access to all resources, jobs, food, fuel, housing, etc. The next step is to confiscate weapons under the guise of "for the good of the nation", so when you dummies finally do wake up, and consider banding together to protect your freedom, you will be unable to do so. As Oliver Wendall Holmes said in disgust after the crash of 1929 "the people deserve the government they are willing to tolerate" I myself am not advocating anything, I am merely expressing an opinion of what is going down and sharing that with you to do your own "due diligence" about.

Eddie S
Eddie S - Thursday September 18, 2008 03:03PM EDT

AND I 'M FREE FALLIN

Yahoo! Finance User
Yahoo! Finance User - Thursday September 18, 2008 03:17PM EDT

SOMEONE is getting rich at our expense!! Please ask: "WHY there is still no uptick rule in place? And why the SEC removed the rules put in place to prevent short-selling us into a crash, but sis NOT remove the rules that would allow a company to protect itself from the same? They KEPT the rules that limiting companies buying back there own stock! Clickity-click from the hedgefunds and they get richity-rich! Someone needs to follow the money!!!!

David L
David L - Thursday September 18, 2008 03:30PM EDT

Oh yeah somone is definatly getting rich. The big CEOs play casino at our expense and broke the house. That, and isn't it odd that Bernenkie helped two companies out, but none of the others. I think he alowed the collapsed to happen, by just sitting back and drink a cup joe as the stock market collapsed.

John
John - Thursday September 18, 2008 03:32PM EDT

Here's a good article about the current crisis: The Great Financial Bubble Scam: How Wall Street Plays Average Investors for Chumps http://www.onlinereviewofbooks.com/

Seshachalam
Seshachalam - Thursday September 18, 2008 04:00PM EDT

Timely warning, excelllant

JerryP
JerryP - Thursday September 18, 2008 04:01PM EDT

now is the time to buy stocks there cheap!!!!!!

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