Los Angeles CA, September 3 (Tangible Investments) - by James O’Dell - Gold and Silver prices dipped sharply on Tuesday with Gold retreating $25.70 or 1.99 percent to close at $1,266.05 an ounce, as investors returned from the holiday weekend to a stronger dollar that weighed on the metals across the board. The price of Silver slid 1.54 to close at $19.20 an ounce while the Gold/Silver ratio fell to 65.94.
Those so-called "safe money-market funds" may now be at risk after the Securities and Exchange Commission's (SEC) recent release of the new money-market mutual regulations, and those with retirement savings have been reviewing the changes, particularly the ones who have, on average, from two to six percent of their 401(k) invested in such funds.
The new rules divide money-market mutual funds into two groups: retail-money market funds, with a typical valuation of $1 per share, and institutional prime money market funds, with a floating net-asset value (NAV) that adjusts to the under market-based value of fund assets, meaning their value can rise above $1 per share.
Due to the changes, retirement plan experts like Robert Lawton, of Lawton Retirement Plan Consultants, suggest that plan sponsors offering money-market investments in defined-contribution plans, should begin evaluating strategy with their investment advisers. Lawton adds that “plan sponsors and (plan) participants look at money-market funds as savings accounts because they feel they can’t lose money, but that will change.”
Many believe, however, that new regulations or not, those saving for retirement should avoid investing in money-market funds altogether. “Our suggestion is that employees should consider avoiding the ownership of money-market funds within a 401(k) plan,” said Sean Ciemiewicz, of Retirement Benefits Group. “401(k)s are accumulation vehicles for retirement and money-market funds are not conducive to the concept of investing for a future retirement,” said Ciemiewicz.
While money funds may protect principal, they offer no protection from inflation or the loss of purchasing power. “Changes to money markets offers plan participants an opportunity to re-explore what it is that they’re really trying to achieve with their 401(k) plan,” says Thom Shumosic, of MidAtlantic Retirement Planning Specialists.
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