Mr. Ed Moy on Stable Value Funds: Did You Know?

Aug 15, 2022

Recently I read an article by MarketWatch that reported that stable value funds are today's most popular asset to include in a 401k, despite what they called complex risks. As the article put it, these funds are both widely seen as a safe haven, but are often opaque. What are these assets and how do they compare to traditional safe haven assets like gold?

I'm Ed Moy and I served as 38th director of the United States Mint and I'm the senior IRA strategist for U.S. Money Reserve. As defined by the MarketWatch article, stable value funds combined diversified bond portfolio with bank or insurance company contracts that help guard against market volatility. In essence, these funds guarantee payments at a specified level of interest regardless of how the market's doing. But while that sounds simple enough, the article also points out that there are often risks that consumers don't know about.

The article states that while in some cases a plan will own all the underlying assets with any fees clearly described in the insurance on the plan that's being offered by a variety of providers to lower the overall risk. The article notes that in other stable value products, the retirement plan owns nothing but a piece of paper. Or, as one retirement plan consultant put it, you'll own no securities. Zero. Nothing. Just a contract.

With these retirement products, all of the assets in the plan are owned not by you and not by the plan, but by the issuing insurance company. Because of this, fees may not be as clear and your wealth could be exposed to significant risk if the company, as the article puts it, goes belly up.

Right now, according to the Stable Value Investment Association, more than 40% of stable value assets are guaranteed by a single insurance company. Still, these products are often seen as a conservative portfolio option. In many ways, the original stable value Fund is owning physical gold like stable value funds.

Gold is often considered a relative safe haven asset during times of economic uncertainty and volatility. But unlike stable value funds, gold's track record is much longer. And unlike stable value funds, you know you own your assets when you buy gold. And that ownership does not change until or if you decide to sell.

Plus, the market price for your gold depends on the asset itself, whereas a stable value fund can suddenly be worth nothing if the company that offers the product gets into trouble or goes out of business. And unlike stable value funds which offer asset return during times of high inflation, gold's price can rise with higher inflation while still retaining its safe haven and store of wealth properties.

So if you're looking to add a time tested safe haven asset to your retirement portfolio, call U.S. Money Reserve today and speak to a dedicated account executive about opening a precious metals IRA backed by physical gold.


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