> They’re protected. There’s an FDIC for securities. Same $250k limit, same likelihood of going above that in practice.
Not really. You're (partially) protected from your broker using your money market fund for themselves - even in a bankruptcy you get your fund back - but you're not protected against it becoming worth a bit less than you deposited (which is what would happen in an SVB-like situation - interest rates go up and so the value of your fund goes down) since it isn't actually cash. The line you quoted is really a warning, in the context of a couple of other lines from your link:
> SIPC protection is limited. SIPC only protects the custody function of the broker dealer, which means that SIPC works to restore to customers their securities and cash that are in their accounts when the brokerage firm liquidation begins.
> SIPC does not protect against the decline in value of your securities
If your money market fund is losing any significant portion of its value, you've got larger societal issues to deal with that make all this stuff irrelevant. Zombies, nuclear war, or something along those lines.
FDIC insurance won't protect you from inflation, either. You asserted the money market stuff isn't protected; it is, either via the FDIC or the SIPC.
> If your money market fund is losing any significant portion of its value, you've got larger societal issues to deal with that make all this stuff irrelevant. Zombies, nuclear war, or something along those lines.
One could have argued the same thing for non-FDIC bank deposits - the worst case for SVB depositors in the collapse would have looked a lot like a failed money-market fund, 94 or 96 or 97 cents on the dollar. That's still a lot different from 100, and it's a realistic thing to happen in a market crash, which do appen.
> FDIC insurance won't protect you from inflation, either. You asserted the money market stuff isn't protected; it is, either via the FDIC or the SIPC.
FDIC guarantees you 100 cents on the (possibly inflated) dollar. Money market funds don't.
3 weeks ago investment A and investment B both had a realistic worst case of ~95 cents on the dollar, with speculation that the government would back it to 100 but no firm guarantee. Now investment A has that firm guarantee and investment B doesn't. Surely you can see what that means for their relative valuation.
Not really. You're (partially) protected from your broker using your money market fund for themselves - even in a bankruptcy you get your fund back - but you're not protected against it becoming worth a bit less than you deposited (which is what would happen in an SVB-like situation - interest rates go up and so the value of your fund goes down) since it isn't actually cash. The line you quoted is really a warning, in the context of a couple of other lines from your link:
> SIPC protection is limited. SIPC only protects the custody function of the broker dealer, which means that SIPC works to restore to customers their securities and cash that are in their accounts when the brokerage firm liquidation begins.
> SIPC does not protect against the decline in value of your securities