Millions and millions of Americans store their dollars in mutual funds, thinking they are the same as a bank account, only they pay a bit more interest. Those who trust mutual funds also think they are instantly liquid, and that their dollars can be withdrawn at any time. No one ever wonders how these funds work, how can they pay interest, and are they insured by the FDIC? The simple answer is that they are not insured, and have no part of the U.S. banking system, nor are guaranteed by any government or insurance company. Mutual funds are merely privately held funds which are invested in stocks, bonds, and other investment devices. Remember the old saying that, "Without risk, there is no reward." Mutual funds are really an investment (risk) device, not unlike bonds, stocks, or hedge funds. Hundreds of millions of Americans have lost their savings in stocks, hedge funds, and bonds.
I strongly suggest that you read the book, "The Big Short." ($15.95 paperbound). The movie version of it has left the theatres and will be released on DVD March 15th. I didn't see the film, but the book savagely illustrates how totally wrong, financial institutions are, were, and could be in the future, as the crash in September of 2007 and on into 2008 showed, to the grief of millions. In the 1980's, when the S&L crash occurred, it was also a classic case of financial institutions not having the slightest idea of what they were doing, but as in the case of 2008 also, brokers and traders knew virtually nothing about what they were doing, and investing in for their clients and companies they worked for, (and were grossly overpaid), buying and selling hundreds of millions of dollars of financial vehicles, about which they knew virtually nothing. I'd be willing to bet that 95% of savers in mutual funds think they are as solid as the Rock of Gibraltar.. They aren't.
The SEC has misled investors of mutual funds for years, insinuating that they are regulated, by reporting the fixed asset values of the funds, as if the underlying values of mutual fund investments never fluctuated. The SEC 'guidelines' for funds are in no way 'regulations,' and now the SEC is going to require mutual funds to classify each asset into one of "six liquidity categories that would be convertible to cash within a certain number of days." This wording mans absolutely nothing as far as liquidity, or the funds being any more certain of value than before such were required. Since I am now 82, and have never had a savings account in my entire life, obviously I have never bought into a mutual fund either. Throughout my life, if I had extra dollars, I spent them on something physically worthwhile, or used them to have a good time. As a kid I saved my allowance, bought an early day reel type power lawn mower and made money cutting neighborhood lawns. In high school I made excellent dollars doing TV repairs. I was a "Ham," so knew electronics. I have always thought that dollars were to be spent and used, rather than saved. Beginning at about age 65, I have saved, but my savings are not in dollars, hedge funds, mutual funds, or stocks. My savings are in real money. Gold and silver, which do not require blessing, regulation, guidelines or insurance from any government or private agency.