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What are Money Market Funds?

One of the new arrivals on the investment scene is the money market fund. Though money market accounts have been around for quite a while, investors are just now starting to take advantage of these great rates by using their money market fund to grow liquid cash very quickly.

A money market fund is a must for any investment portfolio. While you will obviously want to diversify your investments by including things like real estate, stocks, and securities, it’s also important to have some low risk holdings. Similar to bonds and CD rates, a money market fund will have a nice interest rate at very low risk.

When you put money into a money market fund, you are basically providing cash that the government or a large business can use in the cash of a quick cash need. Because these entities are so fiscally stable, there is no risk on your investment. A money market fund can offer as much as 6% on your money. Unlike many types of investment, there is no set amount of time that the money has to grow. Anytime you’d like to get the investment from a money market fund, you can do so very easily.

A money market fund is a good way for young, inexperienced investors to take a chance at investing their money. It’s low risk and the rate of return is very high. Investors shouldn’t have a problem handing over their money to the businesses using a money market fund, because they know that they will get that money back.