Money Market Mutual Funds

“I don't want to be left behind. In fact, I want to be here before the action starts.” -Kerry Packer

Money market mutual funds are a great alternative, for the less affluent investors, to Treasury bills and certificates of deposits. This is because money market mutual funds require less money to be paid out up front. Treasury bills often require thousands of dollars to begin investing. Money market mutual funds are extremely popular, due in part because of their liquidity. This type of fund acts much like a savings account.

Future investors can allow their money to accumulate in a money market mutual fund until there is enough money available to invest in stocks, bonds, and regular mutual funds. Money market funds can be seen a building block for a new investor on his way to creating an investment portfolio. An investor can easily place more money into this fund or remove money when it is needed. There is no paperwork, additional fees, or commissions to a financial advisor.

Money market mutual funds are a great place to rollover investments while trying to decide on your next financial move. For example, if you have stock in a company that is going belly up and you decide to sell, you can place your money in this type of mutual fund until you decide what you will ultimately do with profits.

Another great benefit is that money market mutual funds have a higher rate of interest then a normal savings account. A normal savings account may have a rate of return that is well under 1% however, money markets have an average interest rate of 4.5%. Over a couple of years time, this can create a nice profit to pay for a vacation or to reinvest.

Traditional money market accounts usually need an original investment of at least $5000 dollars however a money market mutual fund can be opened with just $500 dollars and does not require the use of financial advisor or brokerage firm. They can be purchased through a local bank. Banks will often supply a financial manager, for free, that can answer some basic investing questions and even offer advice and direction in building your financial freedom.

Money market mutual funds like equity mutual funds have given options to the small and casual investors. These money market funds are extremely safe, low risk, and offer liquidity. In addition, money market accounts can actually be tax exempt and can a good way to save money without having to pay federal, state, and local taxes on it.

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