Home › Forums › Financial Markets/Economics › Any of you doing anything to your money market accounts just in case of a default?
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October 11, 2013 at 2:46 PM #20800October 11, 2013 at 2:47 PM #766736paramountParticipant
I know this doesn’t answer the question directly, but in reality there is no where to hide.
Well, maybe silver/gold – but that would take some advance planning.
October 11, 2013 at 2:51 PM #766738CoronitaParticipantIt’s not about “hiding”. It’s more about a question of short term liquidity.
Say if you were planning to purchase a property, and your money was sitting in a money market account that happens to have say 60%+ exposure to treasuries (not saying i do…just saying…)
It did make me look though…
October 11, 2013 at 2:52 PM #766739spdrunParticipantThinking about what stocks to buy if 17 Oct comes and goes, since a “default” will be the buying opp of a lifetime. Just like 2008 post-Lehman was.
October 11, 2013 at 6:54 PM #766768SK in CVParticipant[quote=spdrun]Thinking about what stocks to buy if 17 Oct comes and goes, since a “default” will be the buying opp of a lifetime. Just like 2008 post-Lehman was.[/quote]
VIXY calls. And do it before. And be prepared to get out quick.
October 11, 2013 at 7:21 PM #766769paramountParticipantWhat about tbt? (treasury ultra short)
October 11, 2013 at 7:55 PM #766770scaredyclassicParticipantim scared. it all seems too obvious.
October 11, 2013 at 8:02 PM #766771SD RealtorParticipantI played tbt for the past few months but don’t think I would touch it now.
As much as people say treasuries will soar if there is a default, I don’t buy it. I should clarify, I don’t think we will default on payments of notes. Not a chance.
TBT and like funds are usually way ahead of the movement. Look at TBT and it moved in late spring and summer when treasuries moved but over the past several weeks has been stuck. Yellen coming in cemented the fact that QE will go on and on. Tapering may happen but it will be very minor. Yellen is a huge fan of the printing press.
The bottom line is you will not see a default or if there is, it will be incredibly short lived and I think will lack the spectacular imagery that the press and the powers that be want you to live in fear about.
October 11, 2013 at 8:15 PM #766774SK in CVParticipant[quote=paramount]What about tbt? (treasury ultra short)[/quote]
It’s interesting. My girlfriend has been in and out of that a couple dozen times over the last 6 months, made a ton of money. Both short and long. But it reacts to what the Fed does a lot more than the equities market. At least for the time being, the bond market hasn’t shown any concern, only the bill market. There may be an opportunity there, but it’s kind of hard to say what kind of reaction there will be. When investors bail from equities, they typically head to bonds. Eventually this is going to get fixed, and all interest and principle will be paid. TBT isn’t a buy and hold thing, theta erodes it. Long term it can’t do anything but go down. But for the next 14 days, I’d be shocked if it fell much from its close today.
October 11, 2013 at 8:17 PM #766773spdrunParticipantMaybe. Crazy Janet is only one part of the equation — there are two voting seats changing on the FOMC that are being filled by quite conservative regional bank presidents. The makeup of the FOMC as a whole is getting more hawkish next year, thank G-d. Plosser and Fisher are both good men, and a good restraint on the Berkeley moonbattery of certain other people.
October 12, 2013 at 12:11 PM #766796earlyretirementParticipantI don’t keep large amounts in MM’s due to the no FDIC protection but you can easily keep large sums in your Checking or Savings accounts with FDIC protection. Just add on POD beneficiaries to boost the protection beyond the $250,000 limits.
October 12, 2013 at 12:31 PM #766797UCGalParticipant[quote=earlyretirement]I don’t keep large amounts in MM’s due to the no FDIC protection but you can easily keep large sums in your Checking or Savings accounts with FDIC protection. Just add on POD beneficiaries to boost the protection beyond the $250,000 limits.[/quote]
Bank money markets have fdic protection. Brokerage money market funds don’t.I swap money from Schwab brokerage to Schwab Bank if I want the FDIC protection.
I’m not trying to time anything here… no big planned purchases near term so my cash position is in cd’s. I’m trying to just ride my asset allocation -and the litte bit of “spare” cash might get deployed if the market crashes – to buy cheap equities.
I’m not even rebalancing – except on my pre-determined calendar dates (twice a year.)
October 12, 2013 at 6:33 PM #766806CDMA ENGParticipant[quote=earlyretirement]I don’t keep large amounts in MM’s due to the no FDIC protection but you can easily keep large sums in your Checking or Savings accounts with FDIC protection. Just add on POD beneficiaries to boost the protection beyond the $250,000 limits.[/quote]
I am not getting the POD strategy. Can you please expand on past the beneficary part or is that the whole point?
CE
October 12, 2013 at 6:46 PM #766809spdrunParticipantI’m guessing it’s $250k per individual name on the account(s).
October 12, 2013 at 7:32 PM #766810CoronitaParticipant[quote=CDMA ENG][quote=earlyretirement]I don’t keep large amounts in MM’s due to the no FDIC protection but you can easily keep large sums in your Checking or Savings accounts with FDIC protection. Just add on POD beneficiaries to boost the protection beyond the $250,000 limits.[/quote]
I am not getting the POD strategy. Can you please expand on past the beneficary part or is that the whole point?
CE[/quote]
For FDIC insured bank accounts, if ,for instance, the account is titled to a revocable living trust. The insurance ends up being $250k per designated unique beneficiary of the trust… So for example, if your account is titled to a living trust with 4 named beneficiaries on the trust, then it would be insuranced up to $1million
http://www.fdic.gov/deposit/deposits/insured/ownership4.htmlAlso, FDIC insurance limit is per different account types. So if you have an account held in your trust, and other just simply a individual or joint account, then that would count separately as well.
People with brokerage accounts linked to a bank account (like Charles Schwab brokerage and CS Bank) have to be aware of how cash is held in their brokerage account..
….Especially if they are holding onto cash in both the brokerage account and the bank account… In the brokerage side, you have designate how your cash is being held. Some type of cash sweep account types in your brokerage is FDIC insured subject to the same FDIC limits per account types…You need to make sure that the amount you have in your bank sweep brokerage account AND the money you have in just a Charles Schwab Bank account per account type is within the limits.
If your cash in your brokerage is not in a FDIC type holding, it ends up being insured by the SIPC private insurance and any other insurance the brokerage firm has…
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