money market fund or cash

[rijk]

ameritrade offers two option to keep your cash

-FDIC INSURED DEPOSIT ACCOUNT IDA03 NOT COVERED BY SIPC  - Balances reflected in your brokerage account are FDIC-insured and are held by TD Bank N.A and TD Bank USA, N.A., or both (up to $250,000 per depositor, per bank). The IDA balances are not covered by the Securities Investor Protection Corporation (SIPC) protection applicable to your brokerage account.

-TD AMERITRADE Cash - Cash is held in your brokerage account, protected by Securities Investor Protection Corporation (SIPC) coverage applicable to the account against brokerage failure (up to $250,000).

 

rates are identical, basically 0, what i am concerned about is to have cash frozen in a mm fund  during a market crash

 

what is the safest option and would the TD Ameritrade cash option eliminate this risk?

 

regards

rijk

[twacowfca]

During the 2008 bank panic in the US, the US government quickly set up a scheme to insure money market accounts.  Since then, there has been very little concern about this in the US.  What's far more interesting is your question itself.  You're from Europe, right?  If so, your question may be a sign of the early stage of panic there.  Is this possible?

 

To answer your question: The FDIC insured account would be the more secure because the Federal government would have to default on every individual savings account in the country (most of the voters) for that insurance not to pay off.

[rijk]

yes i am european but i am mostly exposed to the us markets & currency

 

my concern is not so much about capital protection but more about being able to access the cash when it would be most beneficial, i.e. during a market crash and to avoid the risk of a repeat of what happened in 2008

 

i am not sure at which level panic exists right now, but it feels to me like the vulcano has been rumbling for a while and an eruption could happen in the near future.....  bottomline, the current debt crisis is not going away and something is going to happen probably sooner than later.......

 

regards

rijk

 

TD Ameritrade and the Reserve money funds

 

The firm's customers were approached by TD Ameritrade brokers and recommended to invest their liquid money in a money fund managed by The Reserve, RYPQX (the Reserve Yield Plus Class R fund), according to investors in the fund.[17][18][19][20] More than 98% of the fund had been sold to TD Ameritrade's clients, as disclosed in a statement from the Reserve on July 29, 2008.[21][improper synthesis?] When the fund broke the buck along with several other Reserve money funds in September, 2008, money assets of thousands of TD Ameritrade clients (including many senior citizens) were frozen. For the larger Reserve Primary Fund that also broke the buck, TD Ameritrade said it will reimburse clients for up to a 3% loss. Other Reserve funds, such as the Interstate Tax Exempt Fund, were sold by TD Ameritrade, and were caught up in the Primary Fund's Failure, leaving investors in these funds without liquidity. However, the Reserve Yield Plus fund previously marketed by the company is not covered by the offer

 

http://en.wikipedia.org/wiki/TD_Ameritrade

[biaggio]

I would keep it in cash.

 

Money markets you get 0 but there maybe some risk there (was it Klarman who said that many hold sovereign debt)...even if there is no risk why keep it there you are basically getting nil. Govt guarantee does not cover investment loss I do not believe,