These are investments and not money markets accounts. Yes, they have daily liquidity and maybe even a checkbook you can carry with you, but in general money markets are considered safe. Automaker “money markets” are unsecured debt that is not FDIC insured.

Did you know that some local automakers are considered “junk bonds” by all of the major ratings agencies? This means there is substantial risk of economic failure according to the rating agencies. In fact, some automakers have very high yields on their bonds right now. The market value of corporate bonds will fluctuate, and if the bond is sold prior to maturity, the investor’s yield may differ from the advertised yield. High yield/junk bonds are not investment grade securities, involve substantial risks and generally should be part of the diversified portfolio of sophisticated investors.

And you may be getting 4-5% from automaker “money markets”?  If you’re interested in loaning the automakers your emergency fund with significant risk of failure, you might as well get paid for the amount of risk you’re actually taking.

Call to Action:

Please call the office if you have money in automaker “money markets.” There are plenty of enticing bank money markets which are insured by FDIC as a replacement. In fact, there are some in our own backyard!

Securities Offered Through LPL Financial Member FINRA/SIPC