Expert: Allen - 10/4/2008

Question
Hi-
We have a CalSTRS 403B plan which is invested 100% in Citi Institutional Liquid Reserves. We were wondering how secure this is, as compared with bonds or stock market, and in light of the current economic situation. Is it prone to big fluctuations related to bank failures? Thanks.

Answer
This sounds like a money market account which is invested in very short term debt instruments. Since it's a mutual fund, it's separate from the assets of Citibank and is not affected by anything that goes on with Citibank. It is very safe. The yield is low. However, that is because there is no risk.
Over the long term bonds and stock will earn more. However there will be down periods.