Posted on May 8, 2010.
This money market investors Ruins' withdrawal plans You may need to be concerned can withdraw your money from money market funds in times of crisis or economic crisis. The Securities and Exchange Commission (SEC) allows Money Market Fund to suspend redemptions in "extraordinary circumstances" .
Most everyone has a little money in such Fund MM. According to financial planning for your retirement, you can have an IRA or 401 (k) and if so, you can certainly make money in such funds. As an investor, you have your money work for you in stocks, bonds and you have some sitting in a fund.
Such a fund is usually a sweep account, "used as a deposit account money. When you buy stocks, equity funds, bonds bond funds or other instruments, money is transferred from your money market sweep fund to pay for them. When stocks, bonds or funds are sold, the proceeds of the sale are placed in your sweep account. Most investment firms have no "cash" available account that is separate from a MM Fund. The end result is that most of us do not have money in these funds.
The Securities and Exchange Commission (SEC) permits the suspension of redemptions of fund MM in extraordinary circumstances, as a financial crisis.
It is unclear as to how pervasive this suspension would be applied during a crisis. Would all of these funds suspend redemptions? There may be some who do not suspend, but each Fund GM has the power buy-hold.
What does this mean for investors? This means that the investor may not be able to withdraw their money when he / she wants. If you are retired and normally withdraw your MM fund fees living, then you will not be able to do so. Even if you do not plan financial planning for retirement, you will be affected. If you have all your money in stocks, and you decide to sell some of your stocks to get cash, you may not be able to as long as that money must go through the Fund Sweep .
The SEC said that the suspension of redemptions may pose serious difficulties for investors who rely on their ability to redeem shares. It seems that the difficulties they have pushed investors are indifferent to the SEC. The just want to protect the banking sector, so there will be no rush on money market accounts during a crisis. It seems that the investor comes last.
Investors should always contact their investment firms and advisers to ensure they understand the financial choices.
