Money Market has been the favorite avenue for some who wish to have a safe, secure and liquid investment. Financial institutions and dealers that lend and borrow money in short-term basis, typically less than a year or up to 13 months, consists the money market.
Though it is a fairly safe place to put your money into, it is not deemed to be a practical investment option. With money market, the rates are considerably variable. Investments may be steady but it is not that big. Inflation may also get the best out of your money market investments due to its short-term operational nature.
Money market investing involves investments with financial vessels such as commercial paper, deposit certificates, banker’s acceptances, federal funds, treasury bills, municipal notes, repurchase agreements and short-lived mortgages and asset-backed securities.
Money Market Loans
We know that with financial vessels loans can be made, so it’s possible to take out money market loans. Don’t get that silly grin up just yet, because such loans are at the very least advisable. As I have said earlier, money market’s rates are very variable so you will not be certain on how much you would receive at a given time. Also, because of variable rates, these loans may give you less than what you really need.
Investment decisions are quite hard to make too because only short bursts can be determined.
Money Market Funds
Money market funds (money market mutual funds) provide investors a place where investments are safe and cash-equivalent assets which are very accessible. It is an open-ended mutual fund that invests in short term securities (a mutual fund that runs with the principles of money market).
To get your hands on the top money market funds, given that it is a type of mutual fund then you should pair up with the best mutual fund companies. Try to look into the mutual fund services that Scottrade, Fidelity Investments, T Rowe Price and Vanguard offers. These online discount brokers may also give you the highest money market rate than you can ever get.
When we talk about financial flexibility, a savings account should not be set aside, considering that savings accounts interest rates are quite high. Several banks could offer an interest rate of as much as 3.5%. You can check the internet for specific information about the banks that offers the best rates.
In investments there are many factors to put into account. Among them, what to invest and where to invest should be the two factors to be considered very vital. There are so many companies that offer so many services that may be great, but not so suitable with your profile and vice-versa. There is also a pool of potential investments that promises great returns but in the sense may not be very stable. So with all these options, confusions are unavoidable.
One should never jump into conclusion and make hasty decisions because this may cost you dearly. Don’t worry, aside from doing your own homework, seek the services of a financial adviser. With financial adviser’s, consider half of the job done.