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Money Market Funds
A money market fund is an investment fund that uses very low risk investments such as bonds and treasury bills. The fund buys short term debt from governments and large corporations and makes a profit on the interest payments. These money market funds are some of the least risk investments a person can hold. But due to their low risk the returns on a money market fund are also low, though consistent and in many cases guaranteed. Money Market funds are very liquid and can be cashed out at any time, unlike some mutual funds that have limits on when you can get your money out of them and even have fee's or penalties for early withdrawal. A money market fund could be a great place to park your capital while you decide on other investment opportunities. Or if the equity markets are becoming too uncertain for your tastes use a money market fund to make some guaranteed gains till the market become clearer and less risky. A diversified investment portfolio should have a portion of your funds in money market funds for the liquidity they offer. Should you need to raise cash for a large purchase or investment opportunity the money can more easily removed from a money market fund than most other forms of investment products.
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