The drawing card behind the money market funds is that they are stable, due to the fact that they invest in ultra short term securities such as the ones issued by banks, the federal government, or large corporate organizations that have a favorable credit rating.
With this form of investment you will receive your return on your investments in the form of a dividend, and ideally this equates the money market fund to the bank certificate of deposit. Unlike other forms of investments, money market funds are absolutely liquid making them highly attractive and advantageous. The money market funds are unlike a CD, which will lock up your funds for as much as three months, or more depending on whether you are focusing on obtaining a decent yield.
You will have the option of selling your shares in a money market fund at the time of your choice, and they come with a few substantial perks such as the ability to write checks against the principal. You will be pleased to note that there is a variety of money market funds that you can select from, and they are largely based on the type of securities they purchase. The most significant factor you must aspire to understanding when investing in them is whether your dividends remain taxable or tax free, and money market funds also come in the form of bond funds and stock funds.
Money Market FUNDS are not FDIC insured and they are also not at most banks. You usually have to go through a brokerage firm or a mutual fund company in order to obtain a money market fund. There are benefits of a money market fund and your money is still relatively safe.
If you have a money market FUND unlike in index mutual funds , your money is invested in government backed securities. You will get a slightly higher yield than money market accounts because there is a slightly higher risk. Before you put your money anywhere talk to a financial adviser or if you trust the people at your bank talk to them. Just remember they will try to get you to put your money with them even if it may not be the best thing for you. Talk to several banks.
If you have a money market FUND unlike in index mutual funds , your money is invested in government backed securities. You will get a slightly higher yield than money market accounts because there is a slightly higher risk. Before you put your money anywhere talk to a financial adviser or if you trust the people at your bank talk to them. Just remember they will try to get you to put your money with them even if it may not be the best thing for you. Talk to several banks.
A money market account is usually FDIC insured and you can get them at almost any bank. Ask about being FDIC insured before you commit to anything. You will get a set yield of return on your money in a Money Market ACCOUNT. There will be restrictions of how many checks you can write and how many transfers you can do in a month. A money market account is like a savings account except you can write checks from it.
