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Hi All,
I have 2 accounts with my broker, a regular
individual account and a recently opened IRA account. The broker set up the
IRA so that any cash in the account is automatically swept into a money
market fund managed by Reserved Funds. The money market pays about double
the interest of my regular account, so I was thinking about setting up my
regular account this way also. Before doing so, I asked my broker whether
the cash in the money market funds were covered by their insurance, and was told
no, that it was being managed by Reserved Funds, and I should call them to
see what insurance they have. I did, and they said they have *no* insurance at
all, but that none is necessary because, under the federal regulations which
govern funds, and which they must follow, my money would still be safe even
if Reserved Funds went under. My questions are:
1. In the unlikely event of fraud or mismanagement
on the part of Reserved Funds, could I lose the money in these
funds?
2. Which should I do - cancel the "money
market fund" option on my IRA, or set up my other account to use this
option? It is more important to me to know my money is safe than to
collect an extra 1% or 2% in interest, so I am leaning towards cancelling this
option on the IRA, unless some knowledgable people can confirm that this money
is totally safe even without insurance.
Thanks for any advice!
Steve
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