Yeah, they are "guaranteed" by the issuer -- but that isn't even the real problem. I'll bet that most people have no idea that money market funds are investments and not covered by even any guarantees let alone insured savings. Just heard this week that one of Mellon Banks money market funds took a hit to its NAV and the bank put in the difference to make shareholders whole again so as not to cause a panic, but you can't count on them to do that. I'm in the process of moving all my money market funds into a treasury fund as we speak.
Richard W.
I had a small annuity with an insurance company and fortunately met all of those conditions to switch it to a bank a few years ago...age, years retired, years I had it. (Anyone who might be eligible has to research it...the rules change). So, now it's in a tax deferred, no fee, FDIC insured account, in a ladder of CDs.
As far as those money funds...what a ripoff. A friend transferred into a money fund that actually managed to lose money with all of their non-money market investments! Plus, there are fees. A little research, and it's possible to find a money market account that has a pretty good interest rate by dealing directly with the bank.
They're soooo sneaky with our money!