Money Market Funds

[wayiwalk]

Jeesh!

This is where I park my 401(k) funds when I want to move out of bonds or stocks.....

.....the noose keeps getting tighter and tighter....

http://www.bloomberg.com/news/2012-0...ket-funds.html

I guess it is the pessimist in me that I would just be at the losing end of the stick.

[don]

Re: Money Market Funds

That was the reason I held my nose and rolled my MM funds into short term treasuries - nothing over 6 months ("laddered" ).

[charliebrown]

Re: Money Market Funds

I would actually support a flotaing nav. Ifff somehow withdraws were not subject to cap gains, so everytime i make a withdraw i don't have a tax event.

[don]

Re: Money Market Funds

Zero interest, zero tax. Only inflation eating a steady hole in my cash savings.

[charliebrown]

Re: Money Market Funds

Just because they pay no interest does not mean you are immune from taxes. If the NAV floats, if you sell your shares at 1.01, and bought them at 1.00 you now have to report a capital gain. It would probably net out in the end, but under current law you would have to report it. It would be a headache. A lot of money moves in and out of my MM.

[goodrich4bk]

Re: Money Market Funds

Zero interest, zero tax. Only inflation eating a steady hole in my cash savings.

For that reason, perhaps holding physical paper is better than MM funds (that may generate a capital loss if they can break the buck) or a bank (which pays zero interest). At least with paper I can often negotiate cash discounts. And there is no tax on cash discounts. So if I can negotiate an average cash discount of 5%, that's the same as pre-tax return at 8%.

[jpetr48]

Re: Money Market Funds

Don,
Do you buy from treasury direct or brokerage?

[don]

Re: Money Market Funds

For that reason, perhaps holding physical paper is better than MM funds (that may generate a capital loss if they can break the buck) or a bank (which pays zero interest). At least with paper I can often negotiate cash discounts. And there is no tax on cash discounts. So if I can negotiate an average cash discount of 5%, that's the same as pre-tax return at 8%.

We just went with a 3-2-1 cc. You take it when you can find it. My wife needs a car - a sizable bang on the savings but at least it's both tangible and locked up - no taxes and no inflation.