| Money market funds are one of the most popular | | | | distinction is whether the dividends earned are |
| cash management tools. These investments are | | | | taxable or tax-free. The Advantages of Money |
| also touted as the safest type of mutual fund. | | | | Market Funds With this type of investment, you |
| But before investing in them, you should first | | | | are allowed to write checks that draw from a |
| know what they are, their benefits, and if they | | | | money market fund. This allows you to enjoy the |
| are suitable investments for you. What Money | | | | benefits of dividend earnings, plus you can easily |
| Market Funds Are Money market funds are | | | | access your cash. However, you need to verify |
| mutual funds that invest in money or financial | | | | with your institution first regarding restrictions and |
| markets, which, in simple terms, means that you | | | | fees. Money market funds are most practical for |
| borrow or loan money, respectively. A money | | | | parking cash you need in the short term. These |
| market fund is similar to your deposit account at | | | | needs may include down payment for a house, a |
| the bank in that it takes your money and uses it | | | | car or a vacation. Also, since money market |
| for investment purposes. Then, a portion of the | | | | funds are completely liquid, you can sell your |
| earnings, which come in the form of dividends, | | | | shares in a money fund anytime you want to. |
| are paid to you. In general, money market funds | | | | Who Invests in Money Market Funds Money |
| pay out monthly dividends. Money market funds | | | | market funds are for investors who want to earn |
| typically invest in short term investments that | | | | decent returns from safe investments. These |
| mature in less than 13 months at the maximum. | | | | investments are usually liquid. This means that you |
| Since money market funds are investment with | | | | have the privilege of drawing out the money |
| shorter time frame, the risk is significantly | | | | within a few business days if you need to. Money |
| reduced. The idea is that lending the money for | | | | market funds also allow you to take advantage |
| the short term is safer as there is a high | | | | of increasing interest rates. This is made possible |
| probability that the amount will be paid back. | | | | by stashing your money in an investment that |
| Normally, money market funds invest in US | | | | adjusts with the movements of the market. |
| Treasury issues, short-term corporate paper, and | | | | Visit the Personal Finances Blog, where you will |
| certificates of deposit. There are different kinds | | | | find excellent articles on everything from Money |
| of money market funds based on the type of | | | | Market Savings Accounts to Money Merge |
| securities they buy. However, the most significant | | | | Accounts. |