One of the oldest money market funds around "broke the buck" the other day, meaning that its net asset value dropped below $1.00 - an unheard of event for a money market fund whose main goal is to maintain a shareholders money with a reasonable rate of interest. This was caused by some Lehman debt that the fund held that went bankrupt. This has caused a ripple effect of people now fearing money markets.
I've posted this video from Don Phillips of Morningstar and will be posting a few additional links to stories to help assuage your fears. Money markets of large money managers are and will be fine. There is risk that they could lose money, but we would expect that firm to make up for that loss.
Scott Dauenhauer CFP, MSFP, AIF
www.meridianwealth.com
SmartMoney: Is Your Money Market Fund Safe?
Morningstar: A Large Money Market Fund Breaks The Buck
Marketwatch: Where to Stash Cash (video)
