A temporary program insuring money market funds has expired. However, according to an article in on Kiplinger.com, there’s not much reason to worry about the safety of money invested in such funds. The insurance program was put in place last fall after the Reserve Primary Fund “broke the buck” – that is, the fund’s investment losses left its shares valued at less than the time-honored standard of one dollar each. Fearing a run on money market funds, the federal government created a program insuring investors in participating funds against investment loss. Despite the end of the insurance program on September 18th, the Kiplinger article said money market funds are still a safe choice for savings.
The returns offered by most money market funds are currently so low that this news is a bit of a moot point. There are numerous places to get better rates along with insurance, such as credit union money market accounts (which differ from money market funds) and certificates of deposit (including those offered by Christian Community Credit Union, a long-time sponsor of this eNewsletter) and online bank savings accounts. Check to make sure the credit union you’re considering is insured by either the National Credit Union Share Insurance Fund or American Share Insurance and the online bank you’re considering is insured by the Federal Deposit Insurance Corporation.