9 ms·

I mean a MMF is not really an investment. It's a place to park your cash when you don't want to invest. Obviously other investments are riskier in the short te

I mean a MMF is not really an investment. It's a place to park your cash when you don't want to invest. Obviously other investments are riskier in the short term, but there's less risk long term in that you aren't guaranteed to lose purchasing power as you are with a MMF.

ghaff 3y ago
Depending on circumstances, it would seem like "I want maintain my pile of cash at roughly its current purchasing power value" is as valid as "I want to bet on making it bigger--based on long-term trends for certain investment classes" (or some combination thereof) as investment strategies.
- bagacrap 3y ago
  Except an MMF is literally not an investment. It's a form of savings. There's nothing invalid about saving. However whether you want to invest or save has very little to do with "circumstances" and everything to do with personal inclinations and needs.
  - ghaff 3y ago
    I must have missed the day in finance class when they covered the magic return/risk point where it went from being an investment to being just savings.
    - bagacrap 3y ago
      Well, for starters, zero seems like an important point, as in if it's risk free then it's qualitatively different from something that has risk. Even govt bonds have risk because although they have a predefined payout, their market price can fluctuate, sometimes a lot. But MMFs --- negligible risk.
    - dragontamer 3y ago
      The debate IIRC is somewhere between 3 month bill and and 1 year notes. MMFs that are majorly composed of overnight 1-day loans is so cash-money that when people say 'money' in finance, they usually mean MMFs. ------ Legally speaking, 3 month bills / loans to the government are considered so reliable, that they are considered money-within-a-week in various regulations. Like Savings accounts or Money Market accounts. IE: so many 3 month bills are being traded around, that it acts pretty damn like cash in practice, like real banking regulations. ------- Yes, there is a sliding scale of money/cash into 30 year loans. But financers call even 1 month stuffs basically money, pretty often. A MMF with overnight loans is absolutely more cash-like than anything else.

ghaff 3y ago

Depending on circumstances, it would seem like "I want maintain my pile of cash at roughly its current purchasing power value" is as valid as "I want to bet on making it bigger--based on long-term trends for certain investment classes" (or some combination thereof) as investment strategies.

bagacrap 3y ago
Except an MMF is literally not an investment. It's a form of savings. There's nothing invalid about saving. However whether you want to invest or save has very little to do with "circumstances" and everything to do with personal inclinations and needs.
- ghaff 3y ago
  I must have missed the day in finance class when they covered the magic return/risk point where it went from being an investment to being just savings.
  - bagacrap 3y ago
    Well, for starters, zero seems like an important point, as in if it's risk free then it's qualitatively different from something that has risk. Even govt bonds have risk because although they have a predefined payout, their market price can fluctuate, sometimes a lot. But MMFs --- negligible risk.
  - dragontamer 3y ago
    The debate IIRC is somewhere between 3 month bill and and 1 year notes. MMFs that are majorly composed of overnight 1-day loans is so cash-money that when people say 'money' in finance, they usually mean MMFs. ------ Legally speaking, 3 month bills / loans to the government are considered so reliable, that they are considered money-within-a-week in various regulations. Like Savings accounts or Money Market accounts. IE: so many 3 month bills are being traded around, that it acts pretty damn like cash in practice, like real banking regulations. ------- Yes, there is a sliding scale of money/cash into 30 year loans. But financers call even 1 month stuffs basically money, pretty often. A MMF with overnight loans is absolutely more cash-like than anything else.