4 ms·

Fidelity and Vanguard have "core" positions (all money goes into these) that are yielding 4.4-4.7%. They're money market funds so are covered by SIPC insurance.

Fidelity and Vanguard have "core" positions (all money goes into these) that are yielding 4.4-4.7%. They're money market funds so are covered by SIPC insurance. If you're looking to open up something for your kid, might as well just open one up for yourself as well.

etrautmann 3y ago
+1 here. This seems like the best option for fixed income assets right now.
- deleted 3y ago
  [deleted]
rybosworld 3y ago
On Fidelity, not every account type has access to those high yielding core positions (I don't know why). But you can choose to invest your cash directly into the high yielding money market funds by placing a trade. The relevant tickets are FDRXX and SPAXX. Do note that this is different than changing your core position.
throwaway2037 3y ago
You wrote: They're money market funds so are covered by SIPC insurance. If I understand your post correctly, this is not like FDIC insurance. Money market funds can always lose money and are not SPIC insured like FDIC insurance. (Please correct me if wrong.) What does it mean to "lose money" in money market funds? Most money market funds are buying very short-dated debt (about 90 days or less) -- like commercial paper [CP] (very popular before 2008) or US Treasury bills. For CP, these are not principal guaranteed, like US Treasuries (please ignore the Tora-Bora cave dwelling DeFi crowd that worries about the US Federal gov't going bankrupt -- I expect there will be a few replies to this post!). As a result, it is possible for the CP issuer to go bankrupt and be unable to repay the principle borrowed. I think you are confusing SPIC insurance that covers you if the brokerage firm files for bankruptcy. No matter the losses from a brokerage firm, you will be covered by SPIC insurance as: The limit of SIPC protection is $500,000, which includes a $250,000 limit for cash. To be clear, money market funds are not cash. They are consider securities under US securities laws. You will be covered up to 500K USD. In my personal opinion, they are about 95-98% as safe as US Treasuries -- usually a very good investment.
- cragfar 3y ago
  Theoretically MM's can break the buck, there's only been like three cases ever, no one actually lost money, and even then worst case scenario they were only ~3% losses. That's why I mentioned SIPC insurance, the only real threat is the broker going under.

etrautmann 3y ago

+1 here. This seems like the best option for fixed income assets right now.

deleted 3y ago
[deleted]

rybosworld 3y ago

On Fidelity, not every account type has access to those high yielding core positions (I don't know why). But you can choose to invest your cash directly into the high yielding money market funds by placing a trade. The relevant tickets are FDRXX and SPAXX. Do note that this is different than changing your core position.

throwaway2037 3y ago

You wrote: They're money market funds so are covered by SIPC insurance. If I understand your post correctly, this is not like FDIC insurance. Money market funds can always lose money and are not SPIC insured like FDIC insurance. (Please correct me if wrong.) What does it mean to "lose money" in money market funds? Most money market funds are buying very short-dated debt (about 90 days or less) -- like commercial paper [CP] (very popular before 2008) or US Treasury bills. For CP, these are not principal guaranteed, like US Treasuries (please ignore the Tora-Bora cave dwelling DeFi crowd that worries about the US Federal gov't going bankrupt -- I expect there will be a few replies to this post!). As a result, it is possible for the CP issuer to go bankrupt and be unable to repay the principle borrowed. I think you are confusing SPIC insurance that covers you if the brokerage firm files for bankruptcy. No matter the losses from a brokerage firm, you will be covered by SPIC insurance as: The limit of SIPC protection is $500,000, which includes a $250,000 limit for cash. To be clear, money market funds are not cash. They are consider securities under US securities laws. You will be covered up to 500K USD. In my personal opinion, they are about 95-98% as safe as US Treasuries -- usually a very good investment.

cragfar 3y ago
Theoretically MM's can break the buck, there's only been like three cases ever, no one actually lost money, and even then worst case scenario they were only ~3% losses. That's why I mentioned SIPC insurance, the only real threat is the broker going under.