CREF Money Market Account may go negative after June, 2021

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ResearchMed
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CREF Money Market Account may go negative after June, 2021

Post by ResearchMed »

EDIT: I've added a post inquiring what others may be changing to if they plan to switch from the CREF MM Fund.
---------------------------

I don't know if this is for our employer's 403b plan at TIAA only or if it applies to other similar plans.

From TIAA:

"We are reaching out to you regarding your account balances invested in the CREF Money Market Account. Due to the persistent low interest rate environment, you may want to review your asset allocation and consider alternatives for your CREF Money Market Account holdings. You can make changes at any time to your account by logging in at [employer's plan].
Here’s what happened
 The Federal Reserve lowered interest rates to near zero in March 2020 in response to the COVID-19 pandemic and resulting market volatility.
 Low interest rates had a negative effect on money market returns across the industry.
 To help avoid negative returns for your CREF Money Market Account balance, we successfully worked with regulators to secure a waiver of account expenses on a limited and short-term basis. This waiver has been extended until June 30, 2021, to the extent necessary to keep yields positive and it cannot be renewed.
 After the waiver expires, you will see negative returns in the Account if interest rates do not rise sufficiently to cover the Account’s expenses...
"

Anyone holding CREF Money Market might want to double check if this applies to your specific holding.

RM
Last edited by ResearchMed on Mon Jun 21, 2021 7:13 am, edited 1 time in total.
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Re: CREF Money Market Account may go negative after June, 2021

Post by Stinky »

ResearchMed wrote: Tue May 25, 2021 10:05 pm I don't know if this is for our employer's 403b plan at TIAA only or if it applies to other similar plans.

From TIAA:

"We are reaching out to you regarding your account balances invested in the CREF Money Market Account. Due to the persistent low interest rate environment, you may want to review your asset allocation and consider alternatives for your CREF Money Market Account holdings. You can make changes at any time to your account by logging in at [employer's plan].
Here’s what happened
 The Federal Reserve lowered interest rates to near zero in March 2020 in response to the COVID-19 pandemic and resulting market volatility.
 Low interest rates had a negative effect on money market returns across the industry.
 To help avoid negative returns for your CREF Money Market Account balance, we successfully worked with regulators to secure a waiver of account expenses on a limited and short-term basis. This waiver has been extended until June 30, 2021, to the extent necessary to keep yields positive and it cannot be renewed.
 After the waiver expires, you will see negative returns in the Account if interest rates do not rise sufficiently to cover the Account’s expenses...
"

Anyone holding CREF Money Market might want to double check if this applies to your specific holding.

RM
Very interesting. Thank you for posting.

Do you know what the current credited rate is on the CREF Money Market Fund? And do you know how much account expense is being waived currently? That would give an idea as to "how negative" the credited rate could be starting in July 2021.

I wonder if other money market funds might follow the lead of CREF, if CREF's money market fund rate does go negative......
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Re: CREF Money Market Account may go negative after June, 2021

Post by crefwatch »

Stinky wrote: Wed May 26, 2021 4:02 am I wonder if other money market funds might follow the lead of CREF, if CREF's money market fund rate does go negative......
The CREF Money Market Account is a total-return unit product that include the option to annuitize. It was created due to customer demand, during a (past) substantial period of higher short-term interest rates. It's part of a suite of variable annuity funds that began with the single option, now called CREF Stock Account, in 1952. Each CREF account has, today, three classes, and three different expense ratios.

Here is the factsheet for CREF Money Market R1. As the most expensive unit class, it seems like a non-starter as a money-market product. (OPINION)
https://fluenttech.tiaa.org/pdf/factsheet/194408704.pdf

The prospectus notes, "Unlike most money market funds, the Money Market Account does not distribute income on a daily basis. Therefore, the Account doe not maintain a constant value of $1.00 per unit and the accumulation unit value will fluctuate." So it's not directly comparable to (for example) the Vanguard Federal Money Market Fund.

Certainly, low interest rates are stressing all money market funds. But I don't think the CREF Money Market account is any kind of market leader in this sort of product. Because it has shown tiny declines in unit value over short periods of time (I mean, prior to today's extremely low interest rates), some of the most conservative money market customers already avoid it.
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Re: CREF Money Market Account may go negative after June, 2021

Post by LK2012 »

I had a small amount of this and just moved mine out in an exchange today. Looked like it would be going to -0.10% . . . no need for that!
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Re: CREF Money Market Account may go negative after June, 2021

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Is there anything special about the CREF Money Market that makes this look somewhat possible/likely in this interest environment? Do other money market funds also have this possibility of going negative as interest rates go lower?

I understand that CREF MM had a waiver so they wouldn't charge fees.
Why didn't other MM funds do something similar? Or did they/some of them?

Or is it more that CREF is announcing this, especially given the hard cut-off date for that fee waiver, whereas other MM funds will simply slip into negative if rates also slip lower?

I think there used to be a TiAA MM fund as well, but it wasn't among the current choices available when the 403b got switched around. If there was, it is still around? Would it have a similar situation?

We can't use ETFs or CDs, etc., within the 403b (which is where almost all of our retirement money is).
Any suggestions about other mutual funds that would be closest to a money market fund? For this particular money, we care more about return OF principal, which might be needed as a lump sum in a year or two, and not so much return on principal. A bank account would be fine, but alas, that's not available in the 403b either.

At least we have the lowest ER class (R3) of TIAA funds. (Do the expenses of the different classes differ that much within the CREF MM? There's not much room to play with, to put it mildly... which is what this is all about, of course.)

RM
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Re: CREF Money Market Account may go negative after June, 2021

Post by grok87 »

That’s amazing. I wonder if any other money market funds would follow
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Re: CREF Money Market Account may go negative after June, 2021

Post by aristotelian »

Vanguard and other firms also adopted temporary fee waivers. If they aren't extended I would expect them to follow suit with TIAA.
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Re: CREF Money Market Account may go negative after June, 2021

Post by JonnyDVM »

Woah. It’s finally happened. The word “impossible” was throw around quite a bit on the forum about this negative rate possibility. I guess you can’t let money sit quietly for a second now!
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Re: CREF Money Market Account may go negative after June, 2021

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JonnyDVM wrote: Wed May 26, 2021 11:25 am Woah. It’s finally happened. The word “impossible” was throw around quite a bit on the forum about this negative rate possibility. I guess you can’t let money sit quietly for a second now!
Yup, I also remember when there were discussions about other countries heading to some negative interest rates, and whether it would be for commercial/insitutional entities, or 'regular people', etc.

But is this a bit different - at least for now?
Is this actually negative interest rates looming, or fees that are higher than the tiny, but not negative, interest rates?
The effect is the same, but somehow those seem to be different.
The *balance* may go down, but at least for now, the actual interest rate isn't going negative...?
Or are true negative interest rates here (in the USA) now, for regular people? Are there any examples of negative rates here for plain vanilla savings accounts or such?

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Re: CREF Money Market Account may go negative after June, 2021

Post by ResearchMed »

For those who are switching away from the CREF MM fund, or any other MM fund that might go negative, what have you selected instead?
[It need not be TIAA-related.]

Thanks.

RM
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Re: CREF Money Market Account may go negative after June, 2021

Post by Stinky »

ResearchMed wrote: Mon Jun 21, 2021 7:14 am For those who are switching away from the CREF MM fund, or any other MM fund that might go negative, what have you selected instead?
[It need not be TIAA-related.]

Thanks.

RM
Has it actually gone negative now?
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Re: CREF Money Market Account may go negative after June, 2021

Post by Da5id »

LK2012 wrote: Wed May 26, 2021 9:56 am I had a small amount of this and just moved mine out in an exchange today. Looked like it would be going to -0.10% . . . no need for that!
I don't see why it is such a big deal or change honestly. Negative nominal rates sound bad. But real rates are what matters and there have been negative real rates for some time. If that bothers people high yield savings accounts still have positive nominal yields.
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Re: CREF Money Market Account may go negative after June, 2021

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Stinky wrote: Mon Jun 21, 2021 7:18 am
ResearchMed wrote: Mon Jun 21, 2021 7:14 am For those who are switching away from the CREF MM fund, or any other MM fund that might go negative, what have you selected instead?
[It need not be TIAA-related.]

Thanks.

RM
Has it actually gone negative now?
The fee waiver doesn't end until the end of this month, as far as I understand it.
And that fee(s?) are different, I think, depending upon whether one's Employer has negotiated an R1, R2, or R3 arrangement with TIAA, with R3 having the lowest fees (based upon plan size?).

Just now, the R3 expense ratio is showing as "0.19%" (gross and net) and the YTD return, 7 Day Current and Effective Yield are all showing "0.00%", as of the close 18 June 2021.

So for now, it's a big fat zero. But not worse than that. :shock:

ETA: The ER for R1 is showing as "0.39%", with R2 as "0.24%".

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Re: CREF Money Market Account may go negative after June, 2021

Post by anon_investor »

ResearchMed wrote: Mon Jun 21, 2021 7:26 am
Stinky wrote: Mon Jun 21, 2021 7:18 am
ResearchMed wrote: Mon Jun 21, 2021 7:14 am For those who are switching away from the CREF MM fund, or any other MM fund that might go negative, what have you selected instead?
[It need not be TIAA-related.]

Thanks.

RM
Has it actually gone negative now?
The fee waiver doesn't end until the end of this month, as far as I understand it.
And that fee(s?) are different, I think, depending upon whether one's Employer has negotiated an R1, R2, or R3 arrangement with TIAA, with R3 having the lowest fees (based upon plan size?).

Just now, the R3 expense ratio is showing as "0.19%" (gross and net) and the YTD return, 7 Day Current and Effective Yield are all showing "0.00%", as of the close 18 June 2021.

So for now, it's a big fat zero. But not worse than that. :shock:

ETA: The ER for R1 is showing as "0.39%", with R2 as "0.24%".

RM
Yikes. I don't have TIAA, but with the guarantee of their MM fund going negative, is it that much riskier to take funds from a guranteed negative MM and putting it into a 20% equity/80% bond mix?

If short term interest rates continue to stay this low, are money market funds even viable?
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Re: CREF Money Market Account may go negative after June, 2021

Post by Da5id »

anon_investor wrote: Mon Jun 21, 2021 7:37 am Yikes. I don't have TIAA, but with the guarantee of their MM fund going negative, is it that much riskier to take funds from a guranteed negative MM and putting it into a 20% equity/80% bond mix?
What does risk mean? And why does this change matter really other than mentally (feels bad to have guaranteed nominal loss)? MM is going from a quite negative real rate to a very slightly more negative real rate. The spiking CPI has a bigger impact than this change IMO.

Mind you, while working I never used a MM fund in my 401k/403b, and haven't since. It is not clear what role a MM has in retirement savings anyway.
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Re: CREF Money Market Account may go negative after June, 2021

Post by anon_investor »

Da5id wrote: Mon Jun 21, 2021 8:05 am
anon_investor wrote: Mon Jun 21, 2021 7:37 am Yikes. I don't have TIAA, but with the guarantee of their MM fund going negative, is it that much riskier to take funds from a guranteed negative MM and putting it into a 20% equity/80% bond mix?
What does risk mean? And why does this change matter really other than mentally (feels bad to have guaranteed nominal loss)? MM is going from a quite negative real rate to a very slightly more negative real rate. The spiking CPI has a bigger impact than this change IMO.

Mind you, while working I never used a MM fund in my 401k/403b, and haven't since. It is not clear what role a MM has in retirement savings anyway.
It was more of a theoretical question. I am still in the accumulation phase, and I certainly do not use any MM fund in any of my retirement accounts. For present day spending, when MM funds offered attractive interest rates (e.g. 2%+), I would keep some money in them for large upcoming expenses (e.g. upcoming tax bill, etc.). But since MM fund rates dropped lover than HYSAs, I have not used MM funds unless you count the Vanguard settlement fund, which money has to go before ETFs can be purchased.

My retired parents use the Vanguard MM settlement fund to accumulate dividends and RMDs for present day spending though. So I can see how a retiree might use a MM fund to handle current day cash flow. In a taxable account, the solution is to just transfer to your checking/savings. In a retirement account, if you do not want to withdraw from the IRA/401k/403b/457, then it is a good question why are you using a MM fund anyway, it should stay invested.
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Re: CREF Money Market Account may go negative after June, 2021

Post by ResearchMed »

anon_investor wrote: Mon Jun 21, 2021 8:21 am
Da5id wrote: Mon Jun 21, 2021 8:05 am
anon_investor wrote: Mon Jun 21, 2021 7:37 am Yikes. I don't have TIAA, but with the guarantee of their MM fund going negative, is it that much riskier to take funds from a guranteed negative MM and putting it into a 20% equity/80% bond mix?
What does risk mean? And why does this change matter really other than mentally (feels bad to have guaranteed nominal loss)? MM is going from a quite negative real rate to a very slightly more negative real rate. The spiking CPI has a bigger impact than this change IMO.

Mind you, while working I never used a MM fund in my 401k/403b, and haven't since. It is not clear what role a MM has in retirement savings anyway.
It was more of a theoretical question. I am still in the accumulation phase, and I certainly do not use any MM fund in any of my retirement accounts. For present day spending, when MM funds offered attractive interest rates (e.g. 2%+), I would keep some money in them for large upcoming expenses (e.g. upcoming tax bill, etc.). But since MM fund rates dropped lover than HYSAs, I have not used MM funds unless you count the Vanguard settlement fund, which money has to go before ETFs can be purchased.

My retired parents use the Vanguard MM settlement fund to accumulate dividends and RMDs for present day spending though. So I can see how a retiree might use a MM fund to handle current day cash flow. In a taxable account, the solution is to just transfer to your checking/savings. In a retirement account, if you do not want to withdraw from the IRA/401k/403b/457, then it is a good question why are you using a MM fund anyway, it should stay invested.
Not quite... Those who are already retired or close to it may well prefer to have somre 'cash equivalent' for living expenses, to minimize downside fluctuations just when some of that money is needed.

And unfortunately, some 403b plans do not have any type of real "bank" account, never mind high(er) yield versions.
And for those still *approaching* retirement, at least some 403b plans do not allow one to transfer any of those holdings out of the plan until actual separation from employment (or less than half time, in some cases).
I see no need to lose even small percentages, or fractions thereof, on relatively large sums, IF there are better choices still available. But it's that "if" that I'm now wondering about...

RM
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Re: CREF Money Market Account may go negative after June, 2021

Post by Da5id »

ResearchMed wrote: Mon Jun 21, 2021 8:27 am I see no need to lose even small percentages, or fractions thereof, on relatively large sums, IF there are better choices still available. But it's that "if" that I'm now wondering about...

RM
But again, what really changes here? CPI was 4.99% for turbulent last 12 months. That will presumably settle down (who knows?). But you were losing on a real basis 4.99% annually if the MM yield were 0%. If the yield becomes -0.1% you are losing 5.09%. Not a very material change, though it *feels* bad to have a guaranteed nominal loss. But nominal returns aren't very important IMO...
Last edited by Da5id on Mon Jun 21, 2021 8:36 am, edited 1 time in total.
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Re: CREF Money Market Account may go negative after June, 2021

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ResearchMed wrote: Mon Jun 21, 2021 8:27 am
anon_investor wrote: Mon Jun 21, 2021 8:21 am
Da5id wrote: Mon Jun 21, 2021 8:05 am
anon_investor wrote: Mon Jun 21, 2021 7:37 am Yikes. I don't have TIAA, but with the guarantee of their MM fund going negative, is it that much riskier to take funds from a guranteed negative MM and putting it into a 20% equity/80% bond mix?
What does risk mean? And why does this change matter really other than mentally (feels bad to have guaranteed nominal loss)? MM is going from a quite negative real rate to a very slightly more negative real rate. The spiking CPI has a bigger impact than this change IMO.

Mind you, while working I never used a MM fund in my 401k/403b, and haven't since. It is not clear what role a MM has in retirement savings anyway.
It was more of a theoretical question. I am still in the accumulation phase, and I certainly do not use any MM fund in any of my retirement accounts. For present day spending, when MM funds offered attractive interest rates (e.g. 2%+), I would keep some money in them for large upcoming expenses (e.g. upcoming tax bill, etc.). But since MM fund rates dropped lover than HYSAs, I have not used MM funds unless you count the Vanguard settlement fund, which money has to go before ETFs can be purchased.

My retired parents use the Vanguard MM settlement fund to accumulate dividends and RMDs for present day spending though. So I can see how a retiree might use a MM fund to handle current day cash flow. In a taxable account, the solution is to just transfer to your checking/savings. In a retirement account, if you do not want to withdraw from the IRA/401k/403b/457, then it is a good question why are you using a MM fund anyway, it should stay invested.
Not quite... Those who are already retired or close to it may well prefer to have somre 'cash equivalent' for living expenses, to minimize downside fluctuations just when some of that money is needed.

And unfortunately, some 403b plans do not have any type of real "bank" account, never mind high(er) yield versions.
And for those still *approaching* retirement, at least some 403b plans do not allow one to transfer any of those holdings out of the plan until actual separation from employment (or less than half time, in some cases).
I see no need to lose even small percentages, or fractions thereof, on relatively large sums, IF there are better choices still available. But it's that "if" that I'm now wondering about...

RM
To my point before, I understand the idea of using a MM to keep some living expenses set aside, but does it really need to remain in the 403b if you are going to spend it anyway? Would it make more sense to pull it out and put it into an FDIC insured savings account? Especially if you are subject to RMDs.
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Re: CREF Money Market Account may go negative after June, 2021

Post by anon_investor »

Da5id wrote: Mon Jun 21, 2021 8:33 am
ResearchMed wrote: Mon Jun 21, 2021 8:27 am I see no need to lose even small percentages, or fractions thereof, on relatively large sums, IF there are better choices still available. But it's that "if" that I'm now wondering about...

RM
But again, what really changes here? CPI was 4.99% for turbulent last 12 months. That will presumably settle down (who knows?). But you were losing on a real basis 4.99% annually if the yield were 0%. If it becomes -0.1% you are losing 5.09%. Not a very material change, though it *feels* bad to have a guaranteed nominal loss. But nominal returns aren't very important IMO...
If over 59.5 take it out to use for current expenses, if not needed, then is probably should be invested anyway, not sitting in cash...
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Re: CREF Money Market Account may go negative after June, 2021

Post by Da5id »

anon_investor wrote: Mon Jun 21, 2021 8:35 am
Da5id wrote: Mon Jun 21, 2021 8:33 am
ResearchMed wrote: Mon Jun 21, 2021 8:27 am I see no need to lose even small percentages, or fractions thereof, on relatively large sums, IF there are better choices still available. But it's that "if" that I'm now wondering about...

RM
But again, what really changes here? CPI was 4.99% for turbulent last 12 months. That will presumably settle down (who knows?). But you were losing on a real basis 4.99% annually if the yield were 0%. If it becomes -0.1% you are losing 5.09%. Not a very material change, though it *feels* bad to have a guaranteed nominal loss. But nominal returns aren't very important IMO...
If over 59.5 take it out to use for current expenses, if not needed, then is probably should be invested anyway, not sitting in cash...
I totally agree with that, I'm not a fan of MM in tax sheltered in general. My only point is that the nominal yield going negative isn't important.
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Re: CREF Money Market Account may go negative after June, 2021

Post by ResearchMed »

anon_investor wrote: Mon Jun 21, 2021 8:34 am
ResearchMed wrote: Mon Jun 21, 2021 8:27 am
anon_investor wrote: Mon Jun 21, 2021 8:21 am
Da5id wrote: Mon Jun 21, 2021 8:05 am
anon_investor wrote: Mon Jun 21, 2021 7:37 am Yikes. I don't have TIAA, but with the guarantee of their MM fund going negative, is it that much riskier to take funds from a guranteed negative MM and putting it into a 20% equity/80% bond mix?
What does risk mean? And why does this change matter really other than mentally (feels bad to have guaranteed nominal loss)? MM is going from a quite negative real rate to a very slightly more negative real rate. The spiking CPI has a bigger impact than this change IMO.

Mind you, while working I never used a MM fund in my 401k/403b, and haven't since. It is not clear what role a MM has in retirement savings anyway.
It was more of a theoretical question. I am still in the accumulation phase, and I certainly do not use any MM fund in any of my retirement accounts. For present day spending, when MM funds offered attractive interest rates (e.g. 2%+), I would keep some money in them for large upcoming expenses (e.g. upcoming tax bill, etc.). But since MM fund rates dropped lover than HYSAs, I have not used MM funds unless you count the Vanguard settlement fund, which money has to go before ETFs can be purchased.

My retired parents use the Vanguard MM settlement fund to accumulate dividends and RMDs for present day spending though. So I can see how a retiree might use a MM fund to handle current day cash flow. In a taxable account, the solution is to just transfer to your checking/savings. In a retirement account, if you do not want to withdraw from the IRA/401k/403b/457, then it is a good question why are you using a MM fund anyway, it should stay invested.
Not quite... Those who are already retired or close to it may well prefer to have somre 'cash equivalent' for living expenses, to minimize downside fluctuations just when some of that money is needed.

And unfortunately, some 403b plans do not have any type of real "bank" account, never mind high(er) yield versions.
And for those still *approaching* retirement, at least some 403b plans do not allow one to transfer any of those holdings out of the plan until actual separation from employment (or less than half time, in some cases).
I see no need to lose even small percentages, or fractions thereof, on relatively large sums, IF there are better choices still available. But it's that "if" that I'm now wondering about...

RM
[emphasis added]

To my point before, I understand the idea of using a MM to keep some living expenses set aside, but does it really need to remain in the 403b if you are going to spend it anyway? Would it make more sense to pull it out and put it into an FDIC insured savings account? Especially if you are subject to RMDs.
We would LOVE to be able to withdraw some of that 403b money, and for several important (to us) reasons.
But alas, until DH retires (or possibly goes less than half time; still checking into that), we cannot remove even one cent. Not for Uncle Sam, and not for us.

We aren't going to spend it "now", but as soon as DH makes that decision, we will absolutely need access to that money. It could be in months or in years. His choice. :happy
So we need (our 'need') to keep some of it available, as though it's our living expenses for later this year or next...

Those are the plan rules.

RM
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Re: CREF Money Market Account may go negative after June, 2021

Post by ResearchMed »

Da5id wrote: Mon Jun 21, 2021 8:37 am
anon_investor wrote: Mon Jun 21, 2021 8:35 am
Da5id wrote: Mon Jun 21, 2021 8:33 am
ResearchMed wrote: Mon Jun 21, 2021 8:27 am I see no need to lose even small percentages, or fractions thereof, on relatively large sums, IF there are better choices still available. But it's that "if" that I'm now wondering about...

RM
But again, what really changes here? CPI was 4.99% for turbulent last 12 months. That will presumably settle down (who knows?). But you were losing on a real basis 4.99% annually if the yield were 0%. If it becomes -0.1% you are losing 5.09%. Not a very material change, though it *feels* bad to have a guaranteed nominal loss. But nominal returns aren't very important IMO...
If over 59.5 take it out to use for current expenses, if not needed, then is probably should be invested anyway, not sitting in cash...
I totally agree with that, I'm not a fan of MM in tax sheltered in general. My only point is that the nominal yield going negative isn't important.
It's not just the 'negative', although that does perk up some ears.

It's a matter of "where can we get the best (or at least an acceptable) yield" on a relatively large sum, of the available choices. High yield savings accounts - ANY savings accounts - are not available for this money.
We didn't have all of our "cash equivalent" in the CREF MM fund. But I frequently re-evaluate the MM type choices available, and this "negative" issue is what gave me the kick to look again now.

And alas, it's not our choice to keep much of this money tax-sheltered.

RM
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Re: CREF Money Market Account may go negative after June, 2021

Post by HomeStretch »

Thanks for sharing, it will be interesting to see if Vanguard and Fidelity MMFs will be affected by this too.

Do you have the option to shift your MMF holdings to a Taxable account (offset by a shift of equity or bonds from Taxable to Tax Deferred) where you can invest in CDs or I-Bonds for a better (or at least positive) return?
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Re: CREF Money Market Account may go negative after June, 2021

Post by anon_investor »

ResearchMed wrote: Mon Jun 21, 2021 8:40 am
anon_investor wrote: Mon Jun 21, 2021 8:34 am
ResearchMed wrote: Mon Jun 21, 2021 8:27 am
anon_investor wrote: Mon Jun 21, 2021 8:21 am
Da5id wrote: Mon Jun 21, 2021 8:05 am

What does risk mean? And why does this change matter really other than mentally (feels bad to have guaranteed nominal loss)? MM is going from a quite negative real rate to a very slightly more negative real rate. The spiking CPI has a bigger impact than this change IMO.

Mind you, while working I never used a MM fund in my 401k/403b, and haven't since. It is not clear what role a MM has in retirement savings anyway.
It was more of a theoretical question. I am still in the accumulation phase, and I certainly do not use any MM fund in any of my retirement accounts. For present day spending, when MM funds offered attractive interest rates (e.g. 2%+), I would keep some money in them for large upcoming expenses (e.g. upcoming tax bill, etc.). But since MM fund rates dropped lover than HYSAs, I have not used MM funds unless you count the Vanguard settlement fund, which money has to go before ETFs can be purchased.

My retired parents use the Vanguard MM settlement fund to accumulate dividends and RMDs for present day spending though. So I can see how a retiree might use a MM fund to handle current day cash flow. In a taxable account, the solution is to just transfer to your checking/savings. In a retirement account, if you do not want to withdraw from the IRA/401k/403b/457, then it is a good question why are you using a MM fund anyway, it should stay invested.
Not quite... Those who are already retired or close to it may well prefer to have somre 'cash equivalent' for living expenses, to minimize downside fluctuations just when some of that money is needed.

And unfortunately, some 403b plans do not have any type of real "bank" account, never mind high(er) yield versions.
And for those still *approaching* retirement, at least some 403b plans do not allow one to transfer any of those holdings out of the plan until actual separation from employment (or less than half time, in some cases).
I see no need to lose even small percentages, or fractions thereof, on relatively large sums, IF there are better choices still available. But it's that "if" that I'm now wondering about...

RM
[emphasis added]

To my point before, I understand the idea of using a MM to keep some living expenses set aside, but does it really need to remain in the 403b if you are going to spend it anyway? Would it make more sense to pull it out and put it into an FDIC insured savings account? Especially if you are subject to RMDs.
We would LOVE to be able to withdraw some of that 403b money, and for several important (to us) reasons.
But alas, until DH retires (or possibly goes less than half time; still checking into that), we cannot remove even one cent. Not for Uncle Sam, and not for us.

We aren't going to spend it "now", but as soon as DH makes that decision, we will absolutely need access to that money. It could be in months or in years. His choice. :happy
So we need (our 'need') to keep some of it available, as though it's our living expenses for later this year or next...

Those are the plan rules.

RM
Just curious, if that money is not coming out right now, why not just have a more conservative overall AA within the 403b? That is what I would do in that situation.
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