"anoop" <ghanwani@[EMAIL PROTECTED]
> wrote in message
news:f87bb2d0-1b01-4051-89d0-293378be190a@[EMAIL PROTECTED]
> Likewise, Fidelity and Vanguard have their own
> "cash reserves" fund. The monies in their accounts
> are insured by the SIPC to 500K (100K for cash
> claims).
Really? I don't think so, at least not for Vanguard. I think this
insurance is for funds in *brokerage* accounts.
> So I assume that's where the account holder
> goes if Vanguard/Fidelity goes bust.
I don't think so. Rather, I think that each individual mutual fund is a
separate cor****ation, so there are firewalls between the organization that
manages the fund and the fund's assets itself.
> But then, with
> these accounts there's also the added risk that the
> fund share itself lose money because of defaults, right?
Yes indeed.
> For example, if one has invested in VCTXX, then
> one could lose part of that money if the state of
> CA goes bust, right? What can one do in this
> scenario? Just stick with treasury funds?
What's your risk profile?
For example, right now Vanguard's short-term investment-grade bond fund is
yielding 4.17% and their treasury bond fund is yielding 2.33%. So at some
point you need to decide whether the extra return is worth the extra risk.
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