Fidelity Cash Reserves question

[nravo]

I have some cash in Fidelity Cash Reserves. What kind of risk is there in this? Worse case scenario, AIG under, lots of MM break the buck?

What's safer?

 

[operator]

Fidelity is participating in the feds money mkt insurance program. you should be fine.

 

[nravo]

Quote from operator:

Fidelity is participating in the feds money mkt insurance program. you should be fine.

But how much insurance, $250,000? 1M?

 

[VoodooMMI]

I think this one would be safer
Fidelity U.S. Treasury Money Market Fund(FDLXX)
When Lehman Brothers went belly up in September, I moved all my $ out of Cash Reserves to FDLXX for a few weeks until I thought that it was highly unlikely that Cash Reserves would break the buck. Fidelity has many money market funds, you can check out the minimum investment amounts, etc here
http://personal.fidelity.com/research/funds/?bar=p

 

[Hurricane]

Insurance up to $250 k although I think this is set to expire at year end. Keep in mind that this fund has an average portfolio maturity of around 60 days. So a more realistic worst case would be that the share price breaks a dollar and is at 98 or 99 cents. And even in this case I would expect Fidelity to step in and make up the difference.

In short, it's as safe as a insured bank account for the time being.

 

[blackjack007]

i have money in fidelity and vanguard because they're "too big to fail". there's a very small chance you'd lose a percent or two, but the fed absolutely would not let them fail completely due to the fact virtually every person has money in them directly or indirectly.

these money funds are paying about 1% versus 0% for treasury money funds (the safest around), so even if you lose 1% on a break-the-buck event, you basically broke even.