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