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Basic Money Market Fund Information

Money market fund investing is for individuals who want to see a return on their investment in a short period of time. Regulated by the federal government, a money market fund is a type of mutual fund. Since this type of investment has a high liquidity nature, the government requires the investing company to invest in low-securities.

Unlike the money in a money market account, the money mutual fund is not federally insured even if the account is opened at a bank. Investing in short-term, safe high-quality securities such as treasury bills, government securities and short term commercial debt, money market fund managers tend to keep their net asset value (NAV) $1.00 per share. The low NAV helps to ensure the money is available when it's needed.

Understanding a money market fund requires understanding what they are and how they work. The investments are debt securities that mature within 13 months. Because of the short term investments, this mutual fund is also known as a cash investment. Helping to ensure a minimal investment risk, the Securities and Commission Exchange mandates all investments to last less than 90 days. As the owner of the money mutual fund, you're an owner of a fraction of the investment held by the investment company.

Their yield is comparable to other types of investment but a taxable money market fund has a higher yield than a non-taxable investment. The fund is mtzblogmix classified by the debt purchased. Non-government money fund investments are known as corporate investments. Instead of investing in government and agency securities, like the government money fund type, corporate money funds invest in the business's money market securities. Only municipality investments involve tax-free money market securities.

Compared to other investments which provide an annual percent yield (APR), money mutual funds only quote a seven day average yield. Despite its average yield, the yield is higher than the yield of a money market account but the fees for a money fund are higher. The fee associated with the fund is called an expense ratio. The expense ratio Http Error Code 401 covers the cost of the The Incredible Airsoft Automatic Electric Gun Part I manager overseeing the fund and managing the investments within it. The yield that's advertised already includes the expense ratio. As a part of the fee, the account manager takes a percentage of the average yield. Typically the manager's percentage ranges between .30 and .50 percent. This means if the investor is being offered a 3.0 average yield, the actual yield ranges between 3.3 and 3.5 percent.

Every money market fund investment manager requires you to open the fund with a minimal 530 Authentication Required amount. The amount is set by the manager. Similar to a checking account, a money market fund allows check Indesign Error Code 5 writing, money transfer and withdrawals. The withdrawals may Diagnostic Policy Service Error 5 have an associated fee. The federal government does limit the amount of preauthorize, telephone and electronic transactions to six per month. Only three of the six can be by check, debit card or draft.

Even though the money is readily available without a penalty, long term investments are not recommended. Investors will gain a better long term return in other investments such as a certificate of deposit.

This article was written by the producers of http://www.moneymarketfundguide.com/
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