SIPC guarantees that the securities held in your account at a brokerage will not be lost if the brokerage fails; it does not guarantee the value of those securities. See https://www.sipc.org/for-investors/what-sipc-protects .
^ Yes, I agree. Money market funds are not savings accounts, whether held at a brokerage or a bank. They are not insured against market decline even if held at a bank. If the OP wants zero risk of loss, CDs or interest bearing savings accounts are the way to go.
Sorry, I forgot – We have 529s for both our kids but there’s no state deduction for contributing and since it’s got some market exposure (though not much when they’re in college) not sure it’s worth it since it’s going out the door pretty soon anyway.
My D’s 529 is still open but we emptied it for first year of college. We hadn’t been contributing much in recent years b/c we knew balance of her expenses would come from the real estate sale.
We paid for one session with a college financial advisor and he was aware of the 529s but said to park the real estate money in MM, and I think he did mention CDs as also good but I just never got around to that.
@doschicos I think we agree. The risk of market loss in a MM fund is real but minuscule. Personally, I keep all “cash” in a MM but for those who are going to lose sleep over the minuscule possibility of market loss I think a CD or savings account is the better option.
OP, even without the state tax deduction the 529 might offer you a tax free option on earnings that effectively yields more than any savings, CD, or MM after taxes. You can do the math there and decide if it’s worth it.
