Are IRA Cash Accounts No Longer Money?

Due to the 2008 financial crisis, the Securities and Exchange Commission (SEC) introduced reforms to prevent investors from impulsively depleting their money market funds, and thereby to stave off runs on available cash, so that these money market funds can still remain intact and beneficial to investors. In 2010, and later in 2014, the SEC followed up amendments to these reforms.
 
According to a press release on July 23, 2014, new SEC rules will require institutional prime money market funds to maintain a net asset value (NAV) so that daily share prices of these funds can fluctuate according to the market value of their assets. Non-government money market funds will now have explicit liquidity fees and “redemption gates,” so that the funds’ managers can deal with liquidity runs.
 
If you are invested in this kind of fund, and are just hearing about these changes, it’s because the SEC allowed for a two-year window of time for the funds’ management and investors to be able to adjust to these important changes. According to the SEC, these changes are significant to both to the funds’ investors who use them for cash management and to municipalities and financial institutions who use them for short-term funding purposes. The final rules also provide more detailed requirements for diversification, disclosure and stress testing.
 
Clearly, what the SEC is trying to achieve with these reforms is to prevent investors from dipping into their money market accounts as though they function simply like money in the bank, without a specific time commitment. In so doing, the government manages to achieve much closer scrutiny and greater control over your money market accounts.
 
Particularly if you’re squirreling away funds for your retirement, you need to ask yourself an important question. Yes, it’s always important to keep cash in the bank for a possible emergency. But is the difference between the percentage of interest paid on a simple savings account and that paid on a money market fund – say, 1.3% — worth the opportunity cost of your investing in gold? And now that your money market funds could, at some point, be eligible for liquidity and redemption-gate fees, are you not incurring a greater opportunity cost by not investing in gold?
 
The conventional argument against investing in gold has always been that it doesn’t yield interest. But, thanks to a squeamish Federal Reserve and a contracting global economy, interest rates have been lower in 2016 than they’ve been in a long time.
 
Yet gold is now in a strong bull market, and according to many financial observers, has only begun its impressive ride to the upside. The yellow metal is the best-performing asset class this year, and is up 24% since January, 2016.
 
Doesn’t it make sense to take a close look at your nest egg, and see how it’s been performing? If you’re too heavily weighted in paper assets, why not move at least some of that nest egg over to a hard asset that the government doesn’t charge you a fee to redeem?
 
For more information, call 800-777-6177 now, and ask to speak to a Fortress Gold Group representative.

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