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money market fund in 403b??

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  • Avatar athenian 
    Participant
    Status: Physician
    Posts: 2
    Joined: 01/10/2018

    What reason would someone have to put retirement money into a money market fund? I have the option to keep my 403b money in a US gov money market fund (ticker RADXX). Besides a somewhat high expense ratio (0.68) and missing out on larger gains from the market, is there any real problem with them – can you lose money?

    I considered switching my money into this fund while getting settled in a new job, re-configuring my asset allocation, moving some money around, etc, and I kinda view this as a savings account that sits under the 403b umbrella (and can’t be touched for years). Do people use this to time the market and shift their funds here if they think the market is going to fall? Or do folks nearing retirement use it to lock in a nest egg with no risk of it shrinking with the market? I know there are better asset allocations for retirement years, and that you shouldn’t time the market, but just curious.

    I mostly see this topic mentioned with regards to emergency funds, and not retirement.

    Why Would Anyone Invest in a Money Market Fund?

    #214388 Reply
    Lordosis Lordosis 
    Participant
    Status: Physician
    Posts: 793
    Joined: 02/11/2019

    Cash has two big advantages. It is not going to lose value in the short term. And it is liquid. Locking your cash up in a 403b takes away the liquidy.
    I am sure some people use it to time the market. And I am sure some because they do not know any better.
    It might have some value on the eve of your drawdown to move some to cash.

    “Never let your sense of morals prevent you from doing what is right.”

    #214390 Reply
    Avatar G 
    Participant
    Status: Physician, Small Business Owner
    Posts: 1463
    Joined: 01/08/2016
    can you lose money?

    Click to expand…

    yes, to inflation.

    I considered switching my money into this fund

    Click to expand…

    Are you planning on liquidating your 403b to use for current expenses?

    Do people use this to time the market and shift their funds here if they think the market is going to fall?

    Click to expand…

    Probably, although they’re wasting money by tilting at windmills.

    Or do folks nearing retirement use it to lock in

    Click to expand…

    Probably, although it is interesting that Vanguard doesn’t use it and Fido uses only 9% for their 2015 target date funds….

    #214399 Reply

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