Move Stable Value to Money Market?

[momoney]

I have a some 401k funds in a Stable Value Fund at Fidelity. It's showing 2.12% YTD returns. I'm losing to inflation here. Should I move those funds (Fidelity allows this with BrokerageLink) into a money market fund?

 

[Dtail]

I have a some 401k funds in a Stable Value Fund at Fidelity. It's showing 2.12% YTD returns. I'm losing to inflation here. Should I move those funds (Fidelity allows this with BrokerageLink) into a money market fund?

I assume the MM is outside the 401k.
What is the history of your SV fund in terms of yield?
I have an SV fund which is currently at a net 4% yield, but for many years it was way above any mm fund, so for me I will keep it for now.

 

[latexman]

I have FIGXX (MM fund) in my 401k. It’s paying 5.23% (7 day yield) today.

 

[momoney]

I assume the MM is outside the 401k.
What is the history of your SV fund in terms of yield?
I have an SV fund which is currently at a net 4% yield, but for many years it was way above any mm fund, so for me I will keep it for now.

1 Yr
+2.61%

3 Yrs
+2.24%

5 Yrs
+2.37%

10 Yrs
+2.38%

My plan allows a certain percentage of funds to be invested outside the company plan sponsored funds. You can buy stocks etc.

 

[Dtail]

1 Yr
+2.61%

3 Yrs
+2.24%

5 Yrs
+2.37%

10 Yrs
+2.38%

My plan allows a certain percentage of funds to be invested outside the company plan sponsored funds. You can buy stocks etc.

At those historic yields I would probably move the funds out.

 

[jollystomper]

This is something I am looking not - not so much if I should move, but at what scale. My SV fund is currently earning about 3%, but at least when interest rates were zero it was still earning that. Unfortunately there are no MM fund options in my 401K. To get a better yield I moved about 10% of it into my tIRA to by Treasury Bills. There is still a large amount there, but since there is no going back I am contemplating how much more to move over.

 

[m3bs]

Similar situation here. I tried to be patient to see if the SVF rates would catch up to the market, but finally made the rollover to an IRA to get more fixed income options.

 

[DrRoy]

My stable fund tends to move toward market rates but with a big lag. It's good on the downside but not so much on the rise.

 

[kyzymurgist]

My stable fund tends to move toward market rates but with a big lag. It's good on the downside but not so much on the rise.

Yes. And this lag provides arbitrage opportunities if your plan allows. Stable value funds will likely generate lower than market yield for some time so MM funds or short term treasuries make more sense now.

I don't understand how Stable Value funds can avoid losses if everyone moves their money. Certainly the remaining investors with inertia will pay some price in the form of even lower yield going forward. Probably why most plans have rules in place to discourage this behavior.

I bailed on my 401k SV fund as soon as short term yields beat the SV yield.

 

[monte1022]

I also moved out of my SV fund (set at 2.19% for all of 2023) and into a MM at 5%+. I did have to go into a bond fund for 90 days before moving to the MM. Thankfully, the bond fund NAV only differed by -1 cent on the way out. This move was all within my 401k plan.

 

[tulak]

I ditched my SVF years ago. It was never a great performer, but at around 2% was better than other options. Once rates increased elsewhere, I sold the SVF and bought better yielding investments.

I could buy back into the SVF in the future, but I think it’s unlikely.

 

[Dtail]

Another option I have is I could move my SVF into low cost Vanguard stock index funds in my 401k and then switch my Fidelity stock index funds into an MM fund.

 

[Luvtoride]

Does your Employer 401k plan allow for “in-service” withdrawals? I did that several years ago (before I retired but after I was 59 1/2) to better position assets for retirement. The funds were moved into an IRA account where I had the freedom to invest in any type of instrument.
I stayed active in the 401k and continued to receive company matching funds to my maximum contributions.