No. of Recommendations: 2
Also, if I am not mistaken, shares of a money market fund are protected by SPIC insurance, even thought the value of the shares aren't.

You're mostly mistaken.

Mutual funds held at mutual fund companies are not protected by SIPC.

Assets held at brokerages, including mutual funds, are protected by SIPC up to $500,000 in the event of insolvency of that brokerage. However, the exception is that cash & cash equivalents are strictly limited to $100,000, and this explicitly includes money market funds. Then there is the further caveat that in order for the cash to be protected, it must be cash that is the result of a recent sale of securities, or cash that is intended to purchase securities in the near future. If you are just parking cash at a brokerage to earn interest, it is not guaranteed protected by the SIPC.

Of course the SIPC may bend their own rules and protect cash that they aren't required to, especially if they can get a buyer for the brokerage's other assets, but it isn't guaranteed.
Print the post  


When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.