Below, an exchange that started with an update from my financial advisor.
Beloved youngish partner of Financial Dudes, LLC, to Funny about Money:
To enhance our ability to remain patient with respect to our long-term investment strategy, we raised the cash level in your portfolio again, by trimming allocations to specific securities.
In addition, we initiated the process to upgrade the quality of our client’s money market holdings to a U.S. Treasury based money market to avoid the turmoil swirling around some money market funds. If you were not in a U.S. Treasury money fund, you will see some activity in your affected accounts in the next day or so.
There certainly has been a tremendous amount of news to digest lately, and we are navigating these markets with your long-term goals in mind. We have seen, and likely will continue to see, short-term volatility in the value of many investments that we hold.
If you have any questions or concerns, simply give us a call.
Funny to BYPoFD:
Thanks, John–
I have about ten or twelve grand in Vanguard’s Prime Money Market fund. VG is claiming it’s not invested in Lehman or related unhappy sites, & so I’m guessing it’s OK to leave the money there… Would you advise moving that money to a different fund? Or into a credit union money market, which just now earns a grand 1.88 percent?
best, –vh
BYPoFDto Funny:
We just moved it to be on the safe side and don’t think there will be any issues with the money market. We will move it back at some point. I wouldn’t really fret the Vanguard money market as they are normally on the conservative side and I don’t think there will be any issues.
Funny toBYPoFD:
Good. I’d pretty much reached the same conclusion.
Doesn’t appear to be much safety anywhere in the current storm, eh?
BYPoFD to Funny:
Not really. Even putting it under your mattress you run the risk of someone stealing it. Eventually we will work through all the problem companies and the ones that survive will be the big winners like in the early 90’s. This seems to be happening with BofA.
The long and the short of it:
Don’t dive out of your money market fund. Especially if it’s with Vanguard. Stay the course.
I did some research and over 50% of the portfolio in the vanguard Prime Money Market is in the US Government and it’s agencies, 28% in CD’s. The rest are also pretty safe investments, and as of today the share price was still $1.
We have a nice sum there, so I remain nervous. But not nearly as nervous as I’d be if my money was in the stock market.
It looks pretty safe. This is about what my advisor says, too. He feels it would be precipitate [oh! i didn’t know i knew that word) to move out of Vanguard’s money market funds.