401k questions? Treasury mm funds...zero risk options.

[CoffeeCat]

We're pulling our 401k out of the stock market--today.

I know very little about investing, but I'm looking for no-risk options.

I want to put our 401k money into a "hangar" where it can just sit there,
and where I'm guaranteed that it won't disappear. I want "no risk."

Does anyone have an opinion on treasury MM funds or Federal MM funds?

Or other options? It can be anything within Vanguard.

What do you think of Ginnie Maes? My initial reaction is "no." I know these
are AAA-rated securities, but in my opinion, anything tied to mortgages right
now, has risk.

Thanks for any suggestions.

[Turbineguy]

1. Nothing is zero risk.

But Treasuries are about as low as you can get.

I would also look at tangible assets where you have some control over their value. Or spending on education (including others in your family). That always seems to have a good rate of return and opportunity costs may be low right now.

[CoffeeCat]

2. I have to keep the money in our 401k within Vanguard...

Those are my options.

I can't take the money out, because that would mean a 30 percent penalty.

I wish there was some kind of "savings account" within a 401k--where the money could just sit there.

This isn't a lot of money, but it's all we've got! :)

[Turbineguy]

3. Then that sounds like a good bet.

You may miss out on some upside, but you will not be lying awake at night, eating your liver. And with one phone call, you can jump back in.

I got mine out just over two months ago and saved myself a lot of downside (about 10 percent) as well as grief.

One fun thing to do is to take your current portfolio and keep tracking it to see how well your decision has worked. Interestingly enough I found that my diversified ex-portfolio reacted stronger to negative market days than positive days.

As for the rest, I was thinking in terms of a larger picture.

[CoffeeCat]

5. So, did you pull your money completely out...

...of your 401k and pay penalties?

Or did you keep the 401k funds in the 401k and move to a MM?

Good timing...kudos to you.

I've been begging my husband to do this for a year. He finally acquiesced YESTERDAY!

So, I'm hoping to do this today.

[Turbineguy]

8. I had a professionally managed IRA

I switched it into a self-managed IRA and it's sitting in the money-market fund. The managed fund faired better than the market in general, but I decided the downside risk was too much.

I have several other accounts (I run my wife's and kids' IRAs as well) and got those mostly out in May.

I have about 96% in "cash" accounts.

[marketcrazy1]

4. from another board, in answer to a similar question

Vanguard's GNMA fund? looks safe, It's got Fed backing and you can have a check book (min check $250) so as to have instant access to your money if you need it. (Currently yielding 5.16% with an expense ration of 0.21%)
https://personal.vanguard.com/us/funds/snapshot?FundId=0036&FundIntExt=INT

Or, if you have enough money (Currently yielding 5.26% with an expense ration of 0.11%)

https://personal.vanguard.com/us/funds/snapshot?FundId=0536&FundIntExt=INT

The Government National Mortgage Association (GNMA, also known as Ginnie Mae) is a U.S. government-owned corporation within the Department of Housing and Urban Development (HUD).

Ginnie Mae provides guarantees on mortgage-backed securities (MBS) backed by federally insured or guaranteed loans, mainly loans issued by the Federal Housing Administration, Department of Veterans Affairs, Rural Housing Service, and Office of Public and Indian Housing. Ginnie Mae securities are the only MBS that are guaranteed by the United States government.
http://en.wikipedia.org/wiki/GNMA
http://www.ginniemae.gov/about/about.asp....

Vanguard Treasury Money Market Fund #0050 (VMPXX)
https://personal.vanguard.com/us/funds/snapshot?FundId=0050&FundIntExt=INT

Holds only U.S. Government & Agency paper. "The fund invests solely in high-quality, short-term money market securities whose interest and principal payments are backed by the full faith and credit of the U.S. government. <b>At least 80% of the fund’s assets will always be invested in U.S. Treasury securities</b>; the remainder of the assets may be invested in securities issued by U.S. government agencies. The fund will maintain a dollar-weighted average maturity of 90 days or less."
https://personal.vanguard.com/us/FundsStrategyAndPolicy?FundId=0050&FundIntExt=INT

The only way you can get closer to your government is to buy Treasury Bills, Notes, Bonds, and Treasury Inflation-Protected Securities (TIPS) directly through Treasury Direct.
http://www.treasurydirect.gov/indiv/myac....

The advantage of Vanguard's Treasury Money Market Fund is that you can get a check book that allows you write checks (minimum check $250) on the account. -- CONTACT YOUR INVESTMENT ADVISER ABOUT RISK, COST, AND RETURN....... this is not intended as investment advise....

[CoffeeCat]

6. Thank you so much!!

I'll read through this.

I guess I'm totally cynical, but I see things like "securities whose interest and
principal payments are backed by the full faith and credit of the U.S. government" and I don't
feel so safe.

Ginnie Maes--I just can't imagine this being safe, given the current housing situation. I know
these mortgage-backed securities don't involve sub-prime, but I'm sure plenty of wealthy and solid
people won't be able to pay their mortgages in the coming months. I'm not too jazzed about this one,
but again--I know nothing.

Thanks again...I'll keep researching.

[eridani]

14. My company 401k with Vanguard has what they call a Stable Value fund

I've had all of my money in it since last March. It isn't available as an IRA option--I asked.

[Zenlitened]

7. You should definitely give Vanguard a call...

... and see what they suggest. They might not be able to give you Financial Advice, in a strict sense, but they could give you a list of funds, etc. that match the parameters you're describing.

For example, Vanguard offers access to FDIC-insured CDs... but I'm not sure they'd be available in a 401(k).

Also... check their year-end distributions calendar. Some of your funds might be about to pay out to shareholders, so timing could be an issue for you as well.

https://personal.vanguard.com/us/VanguardViewsArticlePublic?ArticleJSP=/freshness/News_and_Views/news_ALL_estyearenddists_12082008_ALL.jsp&src=NMC&returnLink=/freshness/News_and_Views/news_ALL_estyearenddists_12082008_ALL.jsp

[marketcrazy1]

9. Ginnie Mae

is the model on witch any new mortgage company( government sponsored ) should be based, they undertook "sound" lending standards and were not "allowed" to gamble for profit like FANNIE MAE and FREDDY MAC,,,,, do your research carefully, my posts are my opinions and are not intended as investment advise..

[DemReadingDU]

10. I have Vanguard Treasury Money Market Fund

If you have less than $50,000, the fund is VMPXX
https://personal.vanguard.com/us/funds/snapshot?FundId=0050&FundIntExt=INT


If you have more than $50,000, the fund is VUSXX
https://personal.vanguard.com/us/funds/snapshot?FundId=0011&FundIntExt=INT

[CoffeeCat]

11. Update: We got out yesterday (Thurs 12/12)...

...and put all of our 401k money in a Vanguard MM account.

Thanks for all of the suggestions and advice.

:)

[elifino]

12. Do you have the option of putting it in a fixed %return

About a year ago I rolled what was allowed to a Roth IRA (3 year CD). The balance I put in a fixed %INTEREST return within the Principle 401K account. Your options depend on your age and the rules and options within you 401K.

[notesdev]

13. Cash.

In a heavy vault. With well-armed 24/7 security. Welcome to deflation.

On a slightly more serious note, you can put your money in Yen, that should be pretty safe for a while.

[unlawflcombatnt]

15. TRUSX

TRUSX is a fund that invests exclusively in US Treasury bonds. The fund goes up as the yields go down. It's up over 10% in the last year, and over 8% in the last 5 months. Below is a link to a comparison between the S&P 500 and TRUSX.

http://ichart.finance.yahoo.com/z?s=%5EGSPC&t=5m&q=l&l=on&z=m&c=TRUSX&a=v&p=s.bmp

[A HERETIC I AM]

16. So what happens when yields start climbing again?

And how long do you think the 10 Year bond will continue to trade at the level it is?

(Currently 110% of par - http://www.bloomberg.com/markets/rates/index.html