I would like to get your opinions on the following Money Market Accounts (technically they are not MMA and not diversified as they invest in one company only)
1. GE Interest Plus http://www.geinterestplus.com/interestplus/index.html
2. Ford Interest Advantage http://www.fordcredit.com/interestadvantage/index.jhtml
I would like to know if they are good vehicles to park money in those accounts. Under what conditions, can they default ? My feeling is they are one of the strongest arms (GE Capital and Ford Capital) of their respective parents.
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posted: Aug. 9, 2005 @ 3:46p
cak144
Senior Member
posted: Aug. 9, 2005 @ 3:49p
GMAC is another financing arm paying excellent rates.
http://www.gmacfs.com/notes/demand/main.htm
jwaitzma
Member
posted: Aug. 9, 2005 @ 4:01p
I am currently an investor in GMAC demand notes. It acts like a money market- with check writing/wire transfer abilities- and is currently paying 4.25% APY. Only downside is it is not FDIC insured, so there is no protection if the company goes under- but there are much bigger ramifications to the economy if GM folds entirely.
manuel
Greedy Member
posted: Aug. 9, 2005 @ 6:06p
I have no strong opinion on GM or Ford's viability but I don't see the sense in taking specific company risk(any company) with money that by definition you are using as a cash reserve/MMA. I would much rather stretch for diversified duration risk with a short term bond fund than put what should be my safest savings at the whims of the market's view of a single company.
Certainly wouldn't do it for a .25-1.0% bump in my rate.
I had been using Ford for some time, but with their recent woes, I've had second thoughts. The premium seems pretty good when you compare different MMA's, but then you have to consider the potential to lose substantially ALL of your investment. Is it really worth the $300 extra per year?
I feel very comfortable using GE and park a substantial amount there. AAA rated companies are not likely to announce a bankruptcy out of the blue. However, companies such as GM & Ford, with junk status credit, net operating losses, and onerous labor agreements, could declare bankruptcy at any time. If Ford were to declare bankruptcy, I believe Ford Capital would be included, but I'm not sure. Certainly not worth the risk for the small premium.
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