Is shifting from mutual funds to money markets a safe bet? : LUSENET : TimeBomb 2000 (Y2000) : One Thread

I moved most of my retirement savings from mutuals to cash reserve funds over a year ago. I would like your opinions as to whether this is the best and safest thing to do, or is there a better option. Thanks, Rick

-- Rick (, September 25, 1999


You've got to take responsibility for you own assets.

Address your question to what are the risks and then decide.

Your plan has to be configured to your (unique) situation.

-- Tom Beckner (, September 25, 1999.

Safer. Not safest. Money market funds not insured. Bank account safer. Banks not really safe. Forget about return on investment until after about Feb. Buried in back yard safer than most.

-- Goldbug (, September 25, 1999.

Rick - why don't you bite the bullet, cash out now while you still can and buy hard assets. The way the dollar is going now, what will your nest egg be worth very shortly?

-- Andy (, September 25, 1999.

Ditto, Tom, Goldbug & Andy

Rick: think short term, diversity and access. Liquidity will rule.

-- Charles R. (, September 25, 1999.

By the way Rick, about a year ago I did the same as you - moved from fidelity magellan eraning 30% + pa at about dow 8,500 in to an overnight money market account earning zero interest. Had to change jobs and cities in order to move the 401k into the prudent bear - which is now paying off. I will probably cash out in december. Don't trust the banks or the system to hold. If you cah out properly you don't pay any penalties or witholding tax until next april. Do you believe there will be a functioning IRS next april. These are your life's savings Rick - you are lucky to have access to this information. 99% of joe six pack will see their 401k's evaporate shortly - it is inevitable, y2k or not. they have been sold down the river by clinton and his cronies.

Good luck!

-- Andy (, September 25, 1999.

These are retirement funds? That means a hefty 10% penalty plus about 20% withheld for taxes. Makes the decision to cash out much more difficult.

One option is to partially withdraw now what you need to survive on based upon your prep needs and your expectation of y2k effects/duration. Also, I think there's no penalty if you put the money back in within 60 days of withdrawal so think about Nov 5 to cash out remaining money.

Talk to an accountant to verify this.

-- Sandwich (anon@anon.anon), September 25, 1999.

From Vanguard's Money Market Funds Participant Prospectus dated March 19,1999.

Under, Fund profile:

Vanguard Prime Money Market Fund (pg.1), Vanguard Federal Money Market Fund (pg.4)and, Vanguard Treasury Money Market Fund (pg.6)is this statement in BOLD green lettering:

"An investment in the fund is not insured or guarenteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in the Fund".

This is not advice but what I did was to move all my allocations (I have four choices) in my 401K to the Vanguard Retirement Savings Trust. It seemed to be the safest of the options. Originally I had 60% of my $ in their Index 500 portfolio which tracks the S&P 500. I made the transaction about a week and a half ago. I decided to make the move based on the postings of this site. Based on the performance of the market this past week, I'm glad I paid attention! I think it might be time for me to buy into those "Eagles". What do you think?

-- John F. (, September 25, 1999.


Your post doesn't specify whether your retirement funds are in tax- deferred accounts such as IRA's, 401(k) plans, etc., or in regular taxable accounts. If tax-deferred, you have to watch for penalties for distributions before age 59 1/2, although there are ways around these punitive taxes.

In the last analysis, your actions will depend on your vision of the future. If you envision a "Road Warrior" scenario, heaven knows what will be of value on the other side. If you expect something less extreme than that, you must ask yourself who is likely to be the last debtor left standing.

A reasonable answer to the last question is the US Gov't, which leads you to T Bills. They are easy to buy in a taxable account, but not so easy in a tax-deferred environment. Most tax-deferred accounts with mutual fund families do not offer T Bills as options except through money market funds which they may offer whose investments are restricted to T Bills. Many fund families do not offer T Bill-only money market funds.

Brokerage firm IRA accounts permit direct T Bill purchases in amounts greater than $10,000. If you have IRA's with mutual funds, you may want to consider a "direct transfer" (this term has special meaning) to a brokerage firm so you can buy the Bills.

Your options are different if you are in a 401(k), or similar, plan. If you e-mail me more specific facts I would be pleased to respond to your particular situation.

-- mike (, September 25, 1999.

I know it's costly but the safest place for your financial assets for the next six months is in hard green cash and gold coins, safely tucked away in your basement or somewhere else where you can protect it yourself until around next March. By then we'll have a good idea of just how bad Y2K is going to be and you can either reinvest everything (a mild Y2K scenario) or keep it in cash and gold (a bad Y2K scenario). By cash I mean actual paper money, in 5's, 10's, 20's, etc.

-- cody varian (, September 25, 1999.

Been there done that when had to dip into the 401(k). Penalized heavily and ended up giving the government $12,000! Moved the 401(k) into a Stable Fund (cash reserves) and that's where I am leaving it until the dust settles. We're all in different directions here and if Andy wants to buy gold then that's where he should be. Everyone's situation is different. But one thing you should have done was claim 10 on your witholding throughout the year. And, if your still into stocks and mututal funds all I can say is GOOD LUCK and this crash has to happen, there's too many rich people running around.

-- ~~~~ (~~~@~~~~.xcom), September 25, 1999.


what are some of the ways to avoid the %20 witholding on a straight IRA withdrawal (other than 1st time home purchase)

-- jjbeck (, September 25, 1999.


I agree with Mike. In my case it was possible to shift within my thrift savings plan from the Stock market Mutual fund, to a safe guaranteed income fund based entirely on Government Securities. If you don't believe in TEOTWAWKI but that a crash is comming that won't mean the fall of the U.S. Government, then T-Bills or Government Bonds is the best bet. It's still quite possible that if bank runs shut down the banks (or Techno failures) and cash is restricted then cash will rule (i.e. the deflationary spiral where the baker will sell his bread for less just to get cash because cash isn'r available).. With that in mind having some cash (possibly several Thousands) on hand is a good idea for that reason and many others.

Best of Luck to you in your decision.. Slammer

-- Slammer (, September 25, 1999.

I think I read on Gary North's site that there is a Canadian Fund that will buy gold eagle coins (OK in 401k if don't take possession - but confirm with accountant)and store them in a secure facility. Might want to check his web sites to locate the article. His articles are categorized.

My husband and I were looking into something simular. I think it can only be in a 401k if you do not actually take possession of the coins. Hubby was unconfortable with having our retirement stored elsewhere and we swallowed hard and took the heavy tax hit and paid the taxes this year. Now concentrating on real wealth investment; home improvement (better weather windows and fireplace insert), preparation supplies, a few coins. Feeling more relaxed having made a decision whether it be poor or good one - time will tell.

Best of luck with your decision. It has to feel right to you.

-- Leslie (***@***.net), September 25, 1999.

If my memory is working, the fund to which you refer is called CENTRAL FUND OF CANADA. It is a open-end mutual fund, listed on the TORONTO exchange (CEF.T), and has the full capability to handle ALL transactions MANUALLY! This is why I remembered it so well. So they are supposedly a gold fund that is y2k-immune (all else considered). For a graph of their stock performance, and further news articles, etc. you can visit Type in the symbol in the left side field box. You'll get the graph.

-- profit_of_doom (, September 25, 1999.

cORRECTION: the symbol is CEF.A , but it IS on the TSE.

-- profit_of_doom (, September 25, 1999.

This message is written as I have read many postings in the greenspun forum regarding positioning in precious metals with investment accounts including IRA and other retirement accounts. The alternative to purchasing Gold Eagles is to purchase shares of Central Fund of Canada Limited (est.1961). The shares qualify for inclusion in retirement accounts and might be the alternative that you have all been searching for. Central's shares trade on the AMEX (CEF) and the TSE (CEF.A). They are backed by over 97.5% with physical gold and silver bullion that is stored in Central's segregated vault within the vault complex of Canada's second largest bank the CIBC. The bullion is audited on a semi-annual basis and is fully insured with an "ALL RISKS" insurance policy. Central is the most cost effective way, that I know of, to purchase, store and insure bullion at under 1% per year. I invite you to review our website located at and would welcome any calls at 905-648-7878 at anytime. Central Fund continues to fulfill its mandate as "The Sound Monetary Fund".

-- J.C. Stefan Spicer (, November 01, 1999.

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