What are Money Market Funds
Don't envy my great retirement -- Join the fun!
This site contains the pieces of the income investing jigsaw puzzle -- now get the Big Picture so you secure your financial future by creating an ever-growing income from investing
Money market funds (MMA) are essentially a special form of open-ended mutual fund. They don't invest in stocks or ordinary bonds or any long term security -- only in short-term, fixed-income securities.
Money market mutual fund accounts include:
Treasury bills
Commercial paper (short-term notes issued by companies to raise money)
Bankers' acceptances
Certificates of Deposit
EuroDollars
Government agency obligations
Money market mutual funds are offered by banks, brokers, and mutual fund/investment companies
If you have an account at the online payment broker Pay Pal, it is essentially a money market savings account which pays interest.
Essentially, money funds are a good place to "park" your money for the short term. Or to keep just enough funds to cover your anticipated short-term expenses. In effect, they are much like regular checking accounts at your bank, except they do pay interest and you can't write checks below a certain minimum amount. The interest they pay is low compared to longer term bonds, but it's more than what your regular checking account pays you (these days -- zero!).
Let's say you have an account at a brokerage. You own some stock, which you sell. You want to reinvest the money in another stock, so you don't want the brokerage to mail you a check for the money. So the brokerage places the cash into its "in-house" money market fund, where it earns some interest before you use it to buy shares of another company.
Most every mutual fund family of any size runs a money market fund that accomplishes the same purpose. It also them to hang on to your cash until you decide to invest it in another one of their mutual funds. But they do pay you the interest your money earns.
And many financially sharp people have their paychecks, pensions, or Social Security checks go direct deposit into a money market fund account so the funds start earning interest immediately.
The most common type of money mutual fund are the general purpose funds.
Click to watch brief (30 second), exciting video on finding financial freedom through investing for income . . .
Now experience for yourself the joy of securing your retirement through income investing!
Want more income -- now or when you retire? Get your free eCourse:
Learn the Secrets of Investors Who Make Money in Both Bull and Bear Markets . . . Good Times and Bad!
Before the subprime mortgage mess makes stock market goes down more . . . before the stock market goes up, making dividend paying stocks more expensive . . . before the rising cost of gas, gold and food -- and the sinking U.S. dollar -- put the world into a recession . . . before retiring baby boomers start selling off their growth stocks . . . before you need investment income just to eat!
7 Reasons to Invest for Income -- NOW More Than Ever
Rick Stooker
- The greatest secret to income investing (Einstein called it "The most powerful force in the universe")
- What -- historically -- gives stock market investors 1/2 of their total returns (from 1929-1954; 1966-1981; and 1999-mid-2008 it was the ONLY way to make money from the stock market!)
- How to avoid suffering from accounting fraud. Automatically keeps you from throwing you money away on future Enrons, Tycos, and WorldComs
It's easy. Just enter your first name and email address into the form below.
(NOTE: I greatly respect your privacy. I will never sell, rent, share or give away your email address to anyone. There is no obligation. You can unsubscribe at any time. After you click the button, you'll be taken to a page to thank you.)
Or, you can subscribe to the 7 Reasons to Invest for Income Now More Than Ever RSS feed. Just click on the orange RSS feed icon below:
Disclaimer:
I am not a financial advisor. I am not a broker. I am not a financial planner.
I have no professional licenses.
I am a wide reader and an independent thinker and this site gives my opinions on the subject of income investing.
Nothing in this site is to be construed as professional advice.
I am not responsible for the results of your investment decisions.
Past results are no guarantee of future returns.
You must read, think over what I say, make your own investment decisions and take responsibility for your own life, including the results of your investment decisions.
Continuing to stay on this site implies your acceptance of these terms.
Income Investing Site Full Website Agreement
Subscribe now to the Money Market Accounts RSS feed:
