Money market mutual funds are the marketplace where money is bought and sold.
It is alternative to bank savings but they are actual funds managed by companies.
It aims is to provide investors with low risk-low return where they can easily access their own money and cash related assets.
Money market mutual funds (MMMF) are invested for security assets where a fund manager collects your money and funds it in various stock markets.
These funds pool collected from various investors are risk-taking but provide higher returns to the investors.
Just make sure before you invest, the in and out’s of the market and to whom you are investing before adding your major luck in the stock markets.
PURPOSE OF MONEY MARKET MUTUAL FUNDS
There are mainly three major purposes of MMMFs and because of its liquidity; they are suitable for investment if you want your money to grow.
- MMMFs offered a convenient parking place for cash reserves when an investor is not sure of investments but he/she can have the expected sum of cash when the investor needed it.
It is safe but risk-taking.
- An investor holding a mutual fund basket can occasionally transfer the assets from one fund to the other if however the investors deciding to sell the funds before purchasing another fund.
The money market mutual funds offered by the same company may be a good place to park the sale and when the appropriate time comes, the investor may exchange his/her share with other funds family.
- In order to benefit their clients, the MMMF brokerage firms regularly used the money to provide cash management services.
Just like you can purchase shares in stock and equity mutual funds, you can also purchase shares in MMMF.
THINGS YOU NEED TO KNOW ABOUT MONEY MARKET MUTUAL FUNDS [FACTS]
- MMMF’s is an alternative to a savings bank account but with higher returns from the funds market depending on the pooled assets of the company.
- Money Market Mutual Funds are liquid, which means you can deposit and withdraw money every day.
- Minimum balances in MMMFs are much higher than savings account depending on the companies.
- Even though MMMF’s are safe but they are not FDIC insured.
- They are bought by the shares and charge an administrative fee and have no penalties for early withdrawal.
- The MMMFs may be taxable or tax-free depending on the type of securities and the location of the securities that the MMMF invested in.
There is no harm in investing at MMMFs but make sure you know all their criteria before investing.
It is a good source for making your money grows as it has higher returns.