Money Market Mutual Funds

Money market mutual funds are also sometimes abbreviated MMMF. These mutual funds are accounts that accrue interest which are set up through a company that sells mutual funds. Sometimes, this type of mutual fund looks at investments that include buying and selling short-term securities with the goal of investor profits. The interest the fund earns can be taken out by the investor or used to reinvest. This is one way the MMMF differs from a traditional mutual fund, which is usually a long-term type of investment.

You will probably have a minimum deposit requirement when opening a money market mutual fund. If at any point, your balance goes lower than the requirement, you may be granted a grace period where you can deposit more money to meet or exceed the minimum. Some funds do not allow you to earn interest on investments unless the minimum balance is maintained. This may differ and is something you can find out when shopping around for money market mutual funds.

The average MMMF focuses on securities that the fund manager believes will bring profit within a fairly short duration. Also, the securities that are chosen are usually low risk for the most part. They might include but are not limited to Treasury bills issued by the government, commercial papers and bankers acceptances. There are some advantages you might enjoy that come along with holding a money market mutual fund.

For example, you can use the money in your account and actually write checks. And, with today’s technology you can transfer funds electronically into and out of the account. This can be done automatically, which is an especially good way to grow your investment. You can contribute to your fund through your employer. This would work by setting up an automatic deposit that is taken directly from your pay and sent to your money market mutual fund account. Even if your employer cannot do this, a broker can help you set up your MMMF and may suggest alternatives like regular electronic deposits to the fund from your checking account.

If you are new to the world of investments, choose an experienced broker to help you set up your first money market mutual fund. There are different things to consider such as the risk level and the minimum deposit requirement. Also, it helps to understand what money markets are and what mutual funds are. You can have these investments separately also in addition to your money market mutual fund. A money market account is like a checking account but earns more interest and limits you as to how much or how often you can withdraw funds. A mutual fund is an investment considered long term that consists of multiple securities. Mutual funds can be low, moderate or high risk and you can spread your investment among different funds.

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