Are Money Market Funds Safe?

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  • เผยแพร่เมื่อ 9 มิ.ย. 2024
  • Money Market funds are designed to be a safe place to park your savings temporarily while offering immediate access and higher interest than you’d get with cash. But there are some worries that these funds could trigger a cash crash. In this video I look at whether money markets are safe and what could go wrong. The biggest risk isn’t what you might think!
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    Timestamps
    00:00 Intro
    00:52 Money Market Bubble
    01:32 Types
    02:28 What’s in Them
    05:16 Why Are They So Popular?
    08:33 Safe
    10:23 Tail Risks
    16:15 Biggest Risk
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ความคิดเห็น • 99

  • @Graemecrompton
    @Graemecrompton 6 หลายเดือนก่อน +37

    As always, the only reliable non-financial advice based commentary available online

    • @stevo728822
      @stevo728822 6 หลายเดือนก่อน

      But why isn't he on his yacht in the Caribbean?

    • @djayjp
      @djayjp 6 หลายเดือนก่อน

      @@stevo728822 Just sound investment advice. He's not a trader. He is retired so there's that.

    • @wlockhart
      @wlockhart 6 หลายเดือนก่อน +1

      ​@@stevo728822 Maybe he doesn't own one, want one or need one?

    • @Pensioncraft
      @Pensioncraft  6 หลายเดือนก่อน +1

      Glad you think so! @Graemecrompton

    • @chrisf1600
      @chrisf1600 6 หลายเดือนก่อน +2

      Only ? Come off it

  • @fusemunk
    @fusemunk 6 หลายเดือนก่อน +7

    The original Money Mark Fund in 1980's - Reserve Fund, was basically a bank account that gave limited chequing and a Debit Card (unusual in the USA) . The concept was that it could take a basic customers money and merge it with others, giving leverage to buy short investments at higher rate than an individual could on their own.

  • @MrHotrod79
    @MrHotrod79 6 หลายเดือนก่อน +13

    “Consumer has simply not stopped spending” = record personal debt / Credit card debt in US…. Can’t go on forever.

    • @VirtualDarKness
      @VirtualDarKness 5 หลายเดือนก่อน

      Fair point; is there a website that shows a chart with the amount of personal debt over time?

  • @daveharruk
    @daveharruk 6 หลายเดือนก่อน +5

    Thanks, and kudos for the way you've approached this subject - having watched other rather alarmist videos on certain other channels about this subject, it is good to have some commentary from someone with a cool head. Rather than a clickbait headline you actually answer the question you posed in a calm and considered way.

    • @Pensioncraft
      @Pensioncraft  6 หลายเดือนก่อน

      Glad you enjoyed it! @daveharruk

  • @lplate1000
    @lplate1000 6 หลายเดือนก่อน +7

    Great content as always. Love this channel.

    • @Pensioncraft
      @Pensioncraft  6 หลายเดือนก่อน +1

      Glad you enjoy it! @lplate1000

  • @jeffocks793
    @jeffocks793 6 หลายเดือนก่อน +4

    Great video as always. I admit to skipping some beats on hearing about ceti changes and the removal of ringfencing in 2022 - I believe some return to over extended lending will return. Is the current consumer boom based on depleting savings or wage rises?

  • @user-wl7jy9wu9m
    @user-wl7jy9wu9m 5 หลายเดือนก่อน +1

    Thanks for all the great informative videos Ramin...may sound a little stupid but how long is too long in my vanguard short-term money market fund.. is 6months the sweet spot? Just when do you know the right time to pull out and find an alternative fund. depending on interest rates

  • @MagicNash89
    @MagicNash89 6 หลายเดือนก่อน +2

    Would love some sort of reminder type video about the 2008/2009 crisis in the format of how you linked to articles on FT in this video

  • @krumw2
    @krumw2 6 หลายเดือนก่อน

    Thanks!

  • @festerarl6653
    @festerarl6653 6 หลายเดือนก่อน +1

    Glad to see Dimson, Marsh and Staunton get (yet another) mention.... 😁

  • @Ed-bj5eq
    @Ed-bj5eq 6 หลายเดือนก่อน +2

    Excellent analysis, thanks

    • @centurione6489
      @centurione6489 6 หลายเดือนก่อน

      Thanks.

    • @Pensioncraft
      @Pensioncraft  6 หลายเดือนก่อน

      Much appreciated! @Ed-bj5eq

  • @josepha9313
    @josepha9313 6 หลายเดือนก่อน +7

    Nice segment Ramin. So, in my US Vanguard Federal Reserve MM acct, monthly interest on 100k is about $550 a month. On 100k in my checking acct, monthly div was 90 cents. Yes, that's cents, not dollars. I'm not quite ready to go back into the stock market quite yet. Have been all out for past 16 months. Waiting on a good dip in the general markets. If there is one, will certainly scale in.

    • @djayjp
      @djayjp 6 หลายเดือนก่อน +7

      The dip was October 2022.... US stocks have rallied 28% since then.

    • @drhafizm287
      @drhafizm287 5 หลายเดือนก่อน

      😂

  • @mohitsaraogi5252
    @mohitsaraogi5252 3 หลายเดือนก่อน +1

    I want to understand bonds, SOFR yield curve, Money market funds, RRP in depth. How do I proceed?

  • @Bracebarian
    @Bracebarian 5 หลายเดือนก่อน +2

    How are MM fund taxed in the UK if outside of and ISA or SIPP? Is it CGT or Income Tax?

  • @alkerbix
    @alkerbix 6 หลายเดือนก่อน +1

    Such a great channel

    • @Pensioncraft
      @Pensioncraft  6 หลายเดือนก่อน

      Thank you @alkerbix

  • @justinarnold1431
    @justinarnold1431 6 หลายเดือนก่อน

    Thank you so much for your videos.

    • @Pensioncraft
      @Pensioncraft  6 หลายเดือนก่อน

      You are so welcome! @justinarnold1431

  • @oliverjamesspicer
    @oliverjamesspicer 6 หลายเดือนก่อน +1

    Really interesting video 😊

    • @Pensioncraft
      @Pensioncraft  6 หลายเดือนก่อน

      Thanks @oliverjamesspicer

  • @DavidLee-uh3xz
    @DavidLee-uh3xz 6 หลายเดือนก่อน +2

    Thank you for doing this video @pensioncraft very imformative

    • @Pensioncraft
      @Pensioncraft  6 หลายเดือนก่อน

      Thanks @DavidLee-uh3xz

  • @mmabagain
    @mmabagain 6 หลายเดือนก่อน +9

    Currently my Vanguard MM is paying me 5.29%. That is over $2K per month and I'm happy with that. I'll be retiring in April of next year so I am not wanting to take much risk. If the MM payout drops below 4%, I will look at alternatives.

    • @flixmaster200
      @flixmaster200 2 หลายเดือนก่อน

      I just love that you're making the same amount as I am, so I immediately knew you had about 1/2M in your MM.

    • @stokey1089
      @stokey1089 2 หลายเดือนก่อน

      Not that it’s of any of my business, but if my calculations are right you should be on $4k+ per month on 1m+, not only $2k+. Either your actually invested around 500k in MM or your platform has a ridiculously high platform fee.

  • @pietrovalsecchi1680
    @pietrovalsecchi1680 6 หลายเดือนก่อน

    Hi Ramin, Have been watching and enjoying your videos for a long time and am one of your biggest fans. Would appreciate it if you could do a video on TLT etf and TMF etf. Thanks a million.

  • @Abdul_Rahman86
    @Abdul_Rahman86 6 หลายเดือนก่อน

    I’m interested in loan notes. Especially for property development.

  • @coderider3022
    @coderider3022 4 หลายเดือนก่อน

    Is it normal to hold this in a general account (not isa or sipp)?

  • @VirtualDarKness
    @VirtualDarKness 5 หลายเดือนก่อน

    17:18 very hard to imagine a scenario that almost happened just earlier this year? or that wasn't it? (SVB)

  • @MATIvmr
    @MATIvmr 6 หลายเดือนก่อน +4

    I only hold emergency fund in CSH2 MM, I’ll hold it until the rates will be at least 4% and more, and as soon as they’ll go below I’m pulling out

    • @TomsPersonalFinance
      @TomsPersonalFinance 6 หลายเดือนก่อน +3

      I'll probably do something similar. Once the rates drop below 4%, the appeal of them kind of fades.

  • @kygo
    @kygo 6 หลายเดือนก่อน

    Why on UK platforms can't we invest in foreign money market funds / Emerging Market funds, surely they would carry a much higher interest rate %?

  • @akshaypotdar1840
    @akshaypotdar1840 4 หลายเดือนก่อน

    What are the UK tax implications on MMF returns if invested outside of ISA?

  • @simon1066
    @simon1066 6 หลายเดือนก่อน

    I use L&G Cash fund within tax efficient wrappers for my cash holdings approx 5% of portfolio for 3 years expenses. I think this is sensible, but appreciate any feedback?

  • @michaeldawson6309
    @michaeldawson6309 2 หลายเดือนก่อน

    What are your views on loosing FCS protection when ticking the Trading212 earn interest button what is the risk?

  • @Ed-oj3yv
    @Ed-oj3yv 9 วันที่ผ่านมา

    If I buy CSH2 this tax year, and sell it next tax year, will i use next tax years interest allowance?

  • @hxjohn
    @hxjohn 6 หลายเดือนก่อน +4

    Using CSH2 To hold as of This month 2 years of expenses for my planned retirement
    Which is in around 2-3 years Time
    Considering a bond ladder but I could continue working so The money market fund is more flexible hopefully it's a reasonably safe option
    Ps Thanks for The video

    • @Pensioncraft
      @Pensioncraft  6 หลายเดือนก่อน

      Thank you @hxjohn I appreciate the support! Ramin

  • @george6977
    @george6977 6 หลายเดือนก่อน

    Why take the risk of gating in MMF when you could buy individual short dated gilts? Americans can buy short term Treasuries from Treasury Direct.

  • @MrNickml
    @MrNickml 6 หลายเดือนก่อน +3

    This video demonstrates why PensionCraft is growing a thriving community of people keen to learn and educate themselves on how to make better-informed investment decisions .. and with access to a toolkit of high quality, informative and well-balanced content ... keep up the excellent work Ramin!

    • @Pensioncraft
      @Pensioncraft  6 หลายเดือนก่อน

      Thank you @MrNickml

  • @kostaskolotouros4345
    @kostaskolotouros4345 6 หลายเดือนก่อน +6

    Thank you for another useful video Ramin. Would Money Market Funds make a sensible third fund in a 3 fund portfolio (E.g. 60% equities, 20% bonds & 20% money market funds)?

    • @user-go7mc4ez1d
      @user-go7mc4ez1d 6 หลายเดือนก่อน

      Why would you hold bonds over MMFs right now?

    • @festerarl6653
      @festerarl6653 6 หลายเดือนก่อน

      Ramin has done a video on this, and iirc he replaces his bond funds with either mmfs or single govvies. So arguably - yes.

  • @jongreenwood3029
    @jongreenwood3029 6 หลายเดือนก่อน +10

    Slightly alarmed that someone over 20 thinks a “normal level” for interest rates is 2-2.5%

    • @michaeldawson6309
      @michaeldawson6309 2 หลายเดือนก่อน +3

      Normal for me is around 5% coming from the 80's ! 10%

  • @MrHotrod79
    @MrHotrod79 6 หลายเดือนก่อน +3

    “Very high rates central banks currently setting” = Mean reverted rates…. A Run on money Market funds is exactly what happened to the Standard Life Sterling Fund in 2008/9. SL ended up putting in corporate liquidity to the fund from memory…

  • @MattMcQueen1
    @MattMcQueen1 6 หลายเดือนก่อน +2

    A question about Vanguard's Sterling Short-Term Money Market Fund. Is it true that the price is always £1.00 if you are investing, so £1,000 will always buy 1000 units? If so, do you get the same payout at the end of the month, no matter if you invest on the 1st of the month, or the second last day of the month?

    • @actuallythedog263
      @actuallythedog263 6 หลายเดือนก่อน +5

      Always £1 but your interest is pro-ratered

    • @MattMcQueen1
      @MattMcQueen1 6 หลายเดือนก่อน +1

      @@actuallythedog263 thanks, that’s what I would expect. Just wanted confirmation.

  • @GavinLawrence747
    @GavinLawrence747 6 หลายเดือนก่อน

    Can anyone recommend a website or tool for me to benchmark my freetrade GIA against the S&P/Nasdaq or other ETFs?

    • @george6977
      @george6977 6 หลายเดือนก่อน +2

      JustETF for UK and Europe; Portfolio visualiser for US.

  • @seanbyrne2220
    @seanbyrne2220 6 หลายเดือนก่อน +3

    Should you use a money market fund? As as a 2 year buffer.
    In case your main pension fund. Crashes

    • @david_akerman
      @david_akerman 6 หลายเดือนก่อน +1

      That's what I'm doing. I'm approaching retirement and have a MM fund as a buffer to draw from in case my stocks fall, or grow more slowly than the MM.

    • @seanbyrne2220
      @seanbyrne2220 6 หลายเดือนก่อน +1

      @david_akerman It's always reassuring.
      To hear people.
      Thinking the same way as you

  • @paul_k_7351
    @paul_k_7351 6 หลายเดือนก่อน +1

    Has anyone been to the shops recently? No one is buying anything, they are just window shopping. Not sure where this retail optimism comes from!

    • @kinggeoffrey3801
      @kinggeoffrey3801 หลายเดือนก่อน

      Pubs and restaurants are always full where I live. Must be credit spending or the bank of dad.

  • @Birdmacher
    @Birdmacher 4 หลายเดือนก่อน

    Hmm, seems like some banks may be showing some cracks as commercial real estate suffers.

  • @Vikas-pv3ie
    @Vikas-pv3ie 6 หลายเดือนก่อน

    Is there any way for common man to be able to buy only UK Treasury Bills and avoid MMFs?

    • @matt49125
      @matt49125 6 หลายเดือนก่อน

      UK Gilts or US T Bills? He did a video on Gilts a few months ago. Not sure about US TBs from the UK. They like to make it hard for us so that we don't make the money availble to the elites..

  • @flixmaster200
    @flixmaster200 2 หลายเดือนก่อน

    I use MM funds because we are actively house hunting and we don't want to pull our money from the market after a sudden crash. If you're nervous about MM, just do an FDIC high yield savings - they are very close to MM now.

  • @informer-365
    @informer-365 6 หลายเดือนก่อน +1

    Why can’t I see chs2 on trading 212

    • @Homo-Maverick
      @Homo-Maverick 6 หลายเดือนก่อน +1

      CSH2 not CHS2 🙃

    • @informer-365
      @informer-365 6 หลายเดือนก่อน

      @@Homo-Maverick thanks I'm assuming the spread is costly?

  • @MagicNash89
    @MagicNash89 6 หลายเดือนก่อน +1

    What does chastising the banks actually mean, a strongly worded letter/call?🤣

  • @VirtualDarKness
    @VirtualDarKness 5 หลายเดือนก่อน +1

    Interesting timing 😅 the video is 6 days old and 4 days ago Trading 212 wrote to say from January you're only going to get interest on cash if you opt in to use qualifying money market funds 🙂

  • @thomasmcdonald5542
    @thomasmcdonald5542 6 หลายเดือนก่อน +3

    Im using CSH2 and single short duration governments gilts like TN24 for my short term saving in my SIPP instead of bond ETFs, its just about 10% though of my overall holdings. Thanks Ramin for explaining how to access these instruments and how they work in one of your previous videos. I have not used these as a flight to safety but rather just for short term good levels of effective and stable interest on my cash like buffer.

    • @Charzhino
      @Charzhino 5 หลายเดือนก่อน

      Can you give me a brief run down on CSH2? How much does it yield and how often?

    • @Marenqo
      @Marenqo 5 หลายเดือนก่อน

      Every day, trade 212

    • @Marenqo
      @Marenqo 5 หลายเดือนก่อน

      5.4 percent or so

    • @thomasmcdonald5542
      @thomasmcdonald5542 5 หลายเดือนก่อน

      @@Charzhino CSH2 is tied to the SONIA rate which is a bit above 5% at the moment. It’s accumulating daily so the amount invested will tick up everyday.

    • @Charzhino
      @Charzhino 5 หลายเดือนก่อน

      @@thomasmcdonald5542 thanks.

  • @elephantandcastle838
    @elephantandcastle838 6 หลายเดือนก่อน +1

    Isn't holding MM funds in a "fun portfolio" an oxymoron? The only reason for holding MM funds is and has always been to avoid market volatility for access to short term cash requirements. Any other reason is just gambling as you'll discover when you notice that the other asset classes have increased in price when you cure your addiction

  • @robertnicholson1409
    @robertnicholson1409 3 หลายเดือนก่อน

    No !

  • @oneeleven9832
    @oneeleven9832 6 หลายเดือนก่อน

    If you’ve read the book..The Great Taking & the author is correct then ..NO

  • @scotdoc
    @scotdoc 6 หลายเดือนก่อน

    We’re not at the peak of the cycle just yet. Another couple of years to go (based on average of 18 years). Crashes are getting bigger.

  • @ZeroRiskAppetite
    @ZeroRiskAppetite 6 หลายเดือนก่อน +2

    "...the biggest risk is not what you might think. This video is sponsored by... "

    • @VirtualDarKness
      @VirtualDarKness 5 หลายเดือนก่อน

      And now the sponsor / T212 is asking people to use MMF if they want to keep earning interest on cash

  • @XORTION
    @XORTION 6 หลายเดือนก่อน

    More capital comes more greed. Fiat is slowly collapsing and bank sectors also. I believe I will see a bail in one day in my life time

  • @djayjp
    @djayjp 6 หลายเดือนก่อน +3

    Please use Chapstick or similar. Your lips are very dry and cracked.

    • @matt49125
      @matt49125 6 หลายเดือนก่อน

      Probably from walking Teddy in the cold

    • @djayjp
      @djayjp 6 หลายเดือนก่อน +1

      @@matt49125 lol no they're literally always like this in every video.

  • @stevo728822
    @stevo728822 6 หลายเดือนก่อน

    Money Market funds fell 30% last year.

  • @GavinLawrence747
    @GavinLawrence747 6 หลายเดือนก่อน

    Thanks!

    • @Pensioncraft
      @Pensioncraft  6 หลายเดือนก่อน +1

      Thank you @mccready7479 much appreciated! Ramin