Short Term Money Market Instruments

It might be a smart financial decision to get involved in the money market because of the act that there is very high liquidity and short-term maturities with various trades. These short-term instruments are great for those who are looking for a relatively fast payoff and very low risk. Once you start looking at all of the different instruments which are available to you, it will become clear that there is little risk involved with most of these. It is still very important to make the right decision regarding which instrument you choose, because they each come with their own set of risks and rewards. Before you make a final decision one way or the other you should make an effort to learn as much as you can about them so that you will be able to benefit greatly from your knowledge. You will always want to keep in mind that the more you know about what you are investing in, the better your chances will be of getting what you want in terms of profitability and reducing loss as much as possible. There are a lot of different options to look at in the short-term money market and it will be essential to review all of them before deciding on one in particular.

One of the first options you will have is U.S Treasury Bills. There are a lot of good reasons to invest in these, including the fact that you are almost guaranteed to get paid back because these bills are issued by the deferral government, specifically the U.S Treasury which is very reliable. When you are looking for a good solid investment, one of the most important things to consider is what kind of a risk you are taking. Since the government will most likely be able to pay you back, unlike individual financial institutions like banks which fail all the time, there is a good chance that you will not lose the money you put in.

Treasury bills or simply T-bills usually take about one to six months to mature depending on what you invest in specifically. They can be purchased in denominations of $1,000 and up to $5 million at various brokerages, banks, and even from the U.S Treasury itself. The main reason that so many people choose to invest their money in T-bills is because the U.S government is thought to be extremely stable and very unlikely to fail in any way, meaning that the amount of loss you are taking on with these bills is very low.

Another of the short term money market instruments available for you to choose from is certificates of deposits or CDs which is essentially a savings certificate that you get and the money you put into your account will accumulate interest over a certain period of time. Those who put money into one of these accounts will not be able to take any of it out before a pre-determined period of time, so it is very important to consider that before you make the decision to go with one of these. One of the great things about a CD is the fact that you are guaranteed payment by the bank; however in the event that the bank fails, you could experience quite a bit of loss. Although it is true that there is a significant amount of risk associated with putting your money in a CD, it can still yield some great results at the time of maturity. It is important to weight both the risks and the benefits when you are trying to make a decision as to whether or not you will want to invest in this type of instruments.

You will also have the option of investing in a banker’s acceptance or BA which is a short-term credit investment which can yield some great results if you are looking for a significant payout that is guaranteed. A majority of the time BAs are used in import-export as well as in money market funds. One of the great things is that BAs are very similar to T-bills, so if you are already associated with these then you might want to consider getting involved in this type of instrument which can help you to earn quite a bit of money over a relatively short period of time. Those who are trying to figure out which investment would be the most intelligent will want to consider all of the factors which will affect their decision as to how to choose the best short term money market instrument.

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