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Stable value fund security
10-30-2008, 08:23 AM
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#1
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Recycles dryer sheets
Join Date: Mar 2007
Posts: 92
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Stable value fund security
When I retired not so long ago I elected not to rollover my Fidelity 401K. One of the main reasons was the "stable value fund" also refered to as the fixed fund. It has paid a fairly consistent interest rate of around 4.5%, which has seemed a relatively good deal in todays market for fixed income. I've got a good chunk of change there. I'm thinking of transfering even a little more into this fund. Does anyone have opinions or advice on the relative security of these types of funds compared to, perhaps a bond rating or other measure of security. As I understand it, the interest comes from contracts with insurance companies and "other" financial institutes, which seems slightly vague and worth questioning these days.
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10-30-2008, 09:37 AM
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#2
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Recycles dryer sheets
Join Date: Jan 2008
Posts: 67
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I was looking at that fund as one of my 401K options, just the other day. I will be interested to read any answers to your questions.
Mike
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10-30-2008, 10:12 AM
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#3
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Thinks s/he gets paid by the post
Join Date: Feb 2007
Posts: 2,612
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Is this fund available retail, or is it one of the funds Fidelity manages for institutional investors only?
If it's the latter, Fidelity should answer your question about the underlying strength of the insurers they bought the GIC (guaranteed investment contracts) from.
I have no opinion particularly on this investment. Fidelity's 401k 'institutional' offerings, however, make it difficult to compare to any other investment.
-- Rita
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10-30-2008, 10:54 AM
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#4
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Full time employment: Posting here.
Join Date: Aug 2006
Location: Columbus
Posts: 769
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Roger
I had a similar stable value fund at Vanguard with my 401K. When I retired in 2007 I rolled my funds into an IRA to get NCUA insurance coverage plus a little better interest rate.
I was in the stable value fund for many years and it never lost a penny but was not insured either.
Here's a link to the fund I was in along with performance info. It tells some about how the money is invested.
https://retirementplans.vanguard.com/pe/pdfs/F4075.pdf
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10-30-2008, 11:39 AM
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#5
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Recycles dryer sheets
Join Date: Jun 2008
Posts: 59
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Our fixed income part of the AA is in this fund earning 4.5% and a lot in the TIAA Annuity presently earning 5.5%. Cha-ching during crappy times and solid and stable even when your stocks are running. {Actually, we also have begun DCA'ing a bit in a TIPS fund as well}.
To me, bond investing is all about stability and far less about producing a return. Stock investing is where you earn the gravy.
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10-30-2008, 02:00 PM
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#6
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Recycles dryer sheets
Join Date: Mar 2007
Posts: 92
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Quote:
Originally Posted by Gotadimple
Is this fund available retail, or is it one of the funds Fidelity manages for institutional investors only?
If it's the latter, Fidelity should answer your question about the underlying strength of the insurers they bought the GIC (guaranteed investment contracts) from.
-- Rita
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Rita, I think this isn't availible to retail investors. I was told that if I rolled this over to a Fidelity IRA that this would not be availible to me. I've thought to call Fidelity and ask my question directly to them however I'm not sure how straight an asnwer I would get, as I'd guess they would word a response to make me feel as safe as possible. Incidentally, this isn't like a bond fund as it's one of their objective to maintain a constant NAV which it has done for the last 15 or 20 years. I would assume the risk might be one of their large insurance contractor having financial problems resulting in low NAV?
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10-30-2008, 02:00 PM
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#7
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Thinks s/he gets paid by the post
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,455
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Quote:
As I understand it, the interest comes from contracts with insurance companies and "other" financial institutes, which seems slightly vague and worth questioning these days.
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I think most of the interests comes from insurance contracts, which should be fairly safe unless these companies are like AIG.
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