HYSA are also FDIC insured which is no joke. Money market funds are vulnerable to "bank runs" the same way a bank is. There have been times, like in 2008, where you were not able to actually pull all your money out. https://www.investopedia.com/articles/economics/09/money-mar...
I guess technically there is always a risk of 100% loss but in the case of the HYSA that would happen if the United States dissolves. With a money market all you need is a bank run.
Yep. I was unfortunate enough to get stuck in a money market fund that “broke the buck” during the financial crisis. It took over a year to liquidate, and I think I still lost around 2% of the principal.
Definitely not a place to stick money you absolutely need to be able to pull out soon.
I use SPAXX at Fidelity. It is mostly government paper, and while not explicitly FDIC insured, I am confident of it's solvency in almost all situations due to new money market regs (that should prevent the most common MMF products from "breaking the buck").
If you are incredibly conservative, you could keep enough cash for 30-90 days in an FDIC deposit account, with the rest in money market funds that will take time to resolve solvency issues.
I guess technically there is always a risk of 100% loss but in the case of the HYSA that would happen if the United States dissolves. With a money market all you need is a bank run.