Stable Value Funds
In your April 9, 2023 column (Money, markets and fear), you gave this list of safe places: insured bank deposits, government-only money market funds, and U.S. Treasury Bills. Notable by its absence was mention of Stable Value Funds. In the past, you have listed Stable Value Funds as safe. I currently have money in a Stable Value Fund and am wondering how safe it is. Am I reading too much into the fact that you did not list Stable Value Funds along with the other three as being safe?
Terry Says
These are actually insurance products offered inside 40l(k) an d403(b) plans. If you’re looking at an “end of the world” scenario there might be a bit of a difference. But that’s not going to happen. And few company retirement plans offer a “safe” hiding place such as a MM fund, because these plans are set up to help you grow your money over the long run. So the “safest” default is typically a stable value fund. Since you’re stuck inside your plan, this is your best choice for the low-risk portion of your investments.
My chicken money advice is typically for people who have money OUTSIDE their company retirement plan — and want the safest choices.
