Re: Money market in 401K
Bill, I'm having similar thoughts. A Money Market account using Qualified money (as in an IRA) is a good safe parking zone for short term use. But longer term, as you point out, it loses vs. inflation.
I have a similar problem, but with unqualified money. Early in the year, I was happy with the amount of cash-like I had, at least I wasn't losing any of it! But time is getting on, my stocks are picking up, and the bonds are doing mostly acceptable too. I need to start doing something about some of the cash-like now. I'm thinking some into TIPS directly, or VIPSX, maybe some in both. I like the idea of another diversified asset class.
There was a study performed by Ibbotson Associates that showed TIPS is a new asset class, that it doesn't correlate with stocks or bonds. But I wonder what the effect of building a mutual fund like VIPSX primarily, but not exclusively around TIPS does to the previous lack of correlation. Whether it starts to have some correlation, and loses a bit of its diversity.
Anyway, I'll also be debating what to do with some of the rest beyond TIPS, whether to salt that across existing investments in the same proportions as now, or what.
-- Telly, the D-I-Y guy --
Two fools dancing on the hands of time